A recent story in the Daily Telegraph raised the question of whether the 'student housing bubble' was about to burst. Duncan Reeves, Associate Director and head of Student Lettings in the Caxtons' Canterbury office responded to some of the messages promoted.
The journalist's position was that the student sector had seen an upsurge in the availability of expensive, luxurious alternatives to traditional accommodation. It is true that developers large and small have invested in purpose built student accommodation (PBSA), whether converting existing buildings or building off plan. It is also true that students are now spoilt for choice and the oversupply is affecting all areas of the student accommodation market.
Duncan agreed that a key point raised, relating to a drop in demand from students, does resonate.
"With the big PBSA providers now firmly established in Canterbury, it will be interesting to see what effect this will have long term on the existing student accommodation."
The first wave of PBSA in Canterbury, which began over 10 years ago, are located on the outskirts of the city – not as convenient for study or socialising. These properties may begin to suffer as students gravitate to the newer blocks in the city centre. There is also a murmur amongst agents that communal house living is still in demand as hard-up students look to save money, so some of the studio apartments that are favoured by developers may not be such a hit with the students.
Duncan continues "I don't believe that student property in Kent is very different from other university towns and with less than a week until terms starts, we have half-a-dozen studios on our books and landlords are accepting discounted rents to attract tenants.
"A large proportion of tenants who have rented purpose built studios are overseas students and money is less of an issue than for UK students. Even so, with the increased competition it has put pressure on some of the developments on the outskirts of the city."
So - have we reached saturation point with the number of student studios in Canterbury?
Duncan's opinion was "Where there are still sites available within walking distance of the University of Kent, or in the city centre, it may make out-lying student properties more challenging to let - as evidenced with the new CRM block at the moment."
An alternative view is that the continued development of PBSA may free up much needed housing stock as landlords of traditional HMO's are forced to sell up. This does not appear to be the case so far this year and Caxtons increased their stock of traditional HMOs, which have let well.
Whilst there has been a desire – even a necessity - for PBSA in recent years, for the majority of UK based students, the pressure of increased tuition fees has meant they are looking for better value over outright exclusivity and facilities. Whilst it is possible that HMOs, just like PBSA, located on the outskirts of town or cities or in poor locations will struggle and may be sold on, there is still strong demand for this traditional student property in Kent. The argument that first time buyers or families would be interested in buying this high turnover letting stock is definitely not guaranteed.