Whilst we all know that there is a shortage of homes across the UK, many do not realise that there is also a vast under-supply of student property, which is proving to be a goldmine for many investors.
Universities across the country are seeing students flooding through their doors every year, and many of those are leaving home for the first time. With so many students choosing to study away from home, there is a high demand for housing in very specific and concentrated areas. It is largely the case that this demand is not being met, and so property investors are seeing the student property market as a wise place to put their money.
Northern Property Markets
According to research, the University Of St Andrews in Scotland is the place for investors to achieve their highest yields when it comes to student property investment. As the university has royal connections, with previous alumni including Prince William and the Duchess of Cornwall, it can attract students from affluent backgrounds.
It is reported that student property in the area could offer yields of up to 12%. With some areas commanding an average price of £300,000 for property, students can expect to pay £150 per week each in a house accommodating five people. This could lead to an annual rental income of as much as £36,000.
Heading north could be wise for investors looking to make the most of the student property market, with demand in the North West rising year-on-year by 38%. With a distinct lack of available property in this area, shared student accommodation in cities such as Liverpool can provide excellent yields.
Surprisingly, the city bottom of the student property tables is Oxford, which only provides yields of 3.3%. This is due to average properties being much higher, with some areas boasting prices of £720,000 for a property that can bring in a monthly rent of £2,000.
Whilst many markets have been hit by the uncertainty surrounding Brexit, the student property market has been seemingly unaffected. This is thought to be due to the fact that any Brexit negotiations will have a minimal affect on the number of students coming to the UK from abroad, meaning that university education will be in the same demand as it has always been. In fact, the number of overseas students from outside of the EU applying to study in this country has actually risen by 2.2% since last year.
It is thought that as much as £5.3 billion will have been put into student property investment by the end of 2017, with increases in this actually occurring after the Brexit referendum. With more than half a million people applying to study higher education courses in the UK in 2017 shows how strong the demand for student property is likely to continue to be.
The type of property that investors plump for should also being considered. Houses that allow for multiple-occupancy not only maximise the potential rental yields, but also have the potential for capital growth when re-sold. When investing in single rooms or pods, it is worth considering that their resale value may be more restricted.
When it comes to investing, student housing is now hot property for smart investors.