The UK’s higher education sector is bracing for another year of rising demand, with the latest figures from UCAS showing a continued increase in university applications. While this may be welcome news for institutions and the wider economy, the knock-on effects are creating fresh challenges in a housing market already struggling to accommodate the needs of an expanding student population.
According to UCAS data, over 750,000 people are expected to apply for undergraduate courses in 2025, up from just under 729,000 the previous year. The surge is driven by a combination of factors: a demographic upswing in the number of 18-year-olds, increased participation in higher education, and continued international interest in UK universities.
This growth is having a significant impact on the Purpose-Built Student Accommodation (PBSA) sector, which plays a crucial role in housing both domestic and overseas students. Purpose-built developments typically managed by private operators offer fully furnished, all-inclusive units that are particularly attractive to international students and first-years looking for a secure and community-oriented living environment.
However, supply is struggling to keep pace with demand. Research from Cushman & Wakefield suggests that in many university cities, there are now fewer than three PBSA beds available for every ten full-time students. Cities such as Bristol, Manchester, and Glasgow are among the worst affected, with local housing markets unable to absorb the overflow.
This shortage is driving up rents, leading to growing concerns about affordability. In some cases, students are being forced to live in neighbouring towns or resort to substandard housing. Student unions and advocacy groups have warned that the lack of affordable, high-quality accommodation risks affecting student wellbeing and could even deter some applicants altogether.
For investors and developers, however, the situation presents both a challenge and an opportunity. While rising construction costs and planning delays have slowed new PBSA developments in recent years, strong underlying demand continues to support the long-term fundamentals of the sector. International students who often prefer PBSA for its convenience and service levels remain a particularly resilient demographic, with numbers rebounding strongly post-pandemic.
There is also growing pressure on local authorities to support more development. With universities facing limits on how many students they can house on-campus, many are partnering with private operators to expand provision. At the same time, there is an increasing focus on sustainability and community integration, with newer PBSA schemes expected to meet higher environmental and design standards.
As UCAS figures continue to climb, the message is clear: the UK needs more student accommodation, and it needs it fast. Balancing quality, affordability, and supply will be key in ensuring that the higher education sector remains globally competitive and that students, both home and international, are not left scrambling for a place to live.
The pressure is mounting, and how the PBSA market responds could shape the student experience for years to come.
