How does European student housing score for affordability?

As students head off to university this autumn, many are still looking for a place to live.

Scotland’s student union found that in 2022, some 12% of students had been homeless at some point since the beginning of their studies, with international students twice as likely to experience homelessness than domestic students.

Earlier this year, students in Italy and Ireland joined protests over the untenable costs and record-high rental growth in both the private rented sector (PRS) and the purpose-built student accommodation (PBSA). The number of student beds is alarmingly low in some European markets. In Italy and Portugal, there are more than 30 students per one student bed. The student housing crisis is rampant across Europe with on average, seven students per one student bed.

Only about 15% of students can access European student housing, with unmet demand for beds of 4.7 million across 17 major European markets. Those unable to secure affordable student housing face soaring costs in the private rental market, where all-in costs for a studio can be up to 46% higher than average PBSA studio rates.

PBSA managed by private for-profit operators, while offering quality accommodation, is out of reach for students who rely on grants and loans. Across Europe, private PBSA housing costs outstrip maximum maintenance loans or student grants.

However, more affordable subsidised student stock is of poorer quality, ageing and often only accessible to domestic students, who fulfil specific socio-economic criteria, or international students enrolled in short-term mobility programmes, such as Erasmus. Still, affordable housing providers co-financed by public subsidies make up 60% of continental Europe’s student housing landscape. In France, CROUS offers over 170,000 beds while Studentenwerk in Germany has almost 200,000 beds.

Public student housing offers competitive prices to private alternatives, with French public student housing rooms around 20% cheaper than the Private Rented Sector (PRS), and rooms in Spain and Italy over 50% cheaper.

While private PBSA might not suit the most cost-conscious students, it remains attractive for other domestic and international students. The analysis of 20 major student cities shows that when including utility costs, rents for private PBSA studios are more affordable than renting a PRS studio in almost every market. The cities where PBSA is cheaper than PRS are among the least affordable cities in Europe.

Key: In Toulouse, a private PBSA studio is 5% more expensive than PRS studio. In Amsterdam, private PBSA studio is 46% cheaper than a PRS studio
Source: JLL, Numbeo, various sources, July 2023. Based on average PRS studio rent in the city centre and outside of centre, average basic utility costs for one person and WiFi costs. Average PBSA studio costs are based on market research conducted in July 2023, rents are all-inclusive

The stark difference between private PBSA and PRS costs results from broader housing affordability challenges across the continent. JLL’s European Rental Index tracked a 10% climb in private rents in Q2 2023, as the cost of renting relative to average disposable income by far surpassed the affordability threshold of 30% in most European cities (see graph below).

Source: JLL, Oxford Economics. PRS rental affordability is based on average home size, average rent per sqm and average household’s disposable income

The mere presence of a university tends to lead to higher rents and shortages of available affordable accommodation, for both students and residents, according to University World News research.

Students must often bear the unaffordable costs of PRS housing. Analysis of UK cities shows that students account for a high share of PRS households. In Exeter and Nottingham, students account for over 40% of all PRS households.

Furthermore, an analysis of 32 European cities shows a drop in rental supply as students return after the summer break, further illustrating students’ reliance on the PRS. Compared to the previous quarter, the number of rental listings across Europe was down by 14%. In cities with high numbers of students, the fall in available rental homes was more pronounced: -61% in Utrecht, -58% in Stuttgart, -40% in Brussels, -38% in Lyon and -28% in both Manchester and Birmingham.

The solution seems obvious – we need more homes. Yet in the short-term, high financing and construction costs threaten the viability of development projects. However, the long-term investment case for PBSA is more solid than ever. Building more student homes would be beneficial for students, who cannot find appropriate housing. It’s also essential to universities, whose reputation can suffer when they are unable to provide appropriate housing. Finally, those additional homes would also help ease pressure on the PRS market.