Whilst political turmoil continues to stifle UK residential and commercial construction, cradle and grave living construction remains strong.
Purpose-Built Student Accommodation (PBSA) in the UK has enjoyed record levels of growth in 2019, rising by 5.3% in the past 12 months according to a recent report compiled by StuRents.
Overall, 34,000 new beds entered the market in 2019 through PBSA construction. Similarly, the number of Houses in Multiple Occupation (HMOs) remains strong with investors looking to capitalise on the student market.
Currently, 56.1% of all beds in the student sector are made up of HMO properties with the average rent rising by 6% in 2019.
However, the report found that certain locations such as Newcastle-upon-Tyne, Plymouth and Cardiff have seen a fall in planning applications in this sector with declining numbers in university aged school leavers at a low point for the next two years.
Investment in retirement property is also enjoying a sustained boom. Those aged 65 or over currently living alone now outnumber those under 65 for the first time. As more people look for independent living, suitable for an ageing population, construction for this demographic is on the rise.
Demand for care home places is set to rise by an additional 6,700 places up to 2020 with researchers suggesting this will only rise further after this point.
According to research by Knight Frank, with de-registered beds decreasing by 4% in 2019 and the number of new registration beds increasing by 2%, it is likely that construction in this area is set to take off.
Already in 2019, care home stock has increased by 1% from 472,000 bed places to 477,000. As demand for increased beds rise, further construction in the sector is predicted to exceed the current 12,250 registered homes.
Affordable accommodation is also enjoying a lot more investment in 2019. Recent National Housing Building Council data found affordable housing figures to have risen by 11% when compared with the construction output from 2018.
Overall, affordable housing registrations, including public and private rental sector builds and shared ownership homes increased from 3,136 to 4,760 in Q3 2019.
Legal & General Affordable Homes announced increase investment of £750 million new affordable housing projects with their development pipeline increasing to 3,500 homes.
Determined to speed up the delivery of recent affordable home construction developments, Homes England released £38.2 million from the Local Authority Accelerated Construction (LAAC) which aims to unlock public land and increase the speed of delivery on local authority housing schemes.
Richard Ward, Head of Research at StuRents, said:
“The student accommodation market is shifting and there is no doubt that the Purpose-Built Student Accommodation sector is soaring to frothy heights. With record growth in the past 12 months, the current pipeline is set to break records, outstripping university supplied accommodation for the first time.
“In the short term, some locations may suffer from oversupply, however, this is likely to change as the 18 year old demographic recovers from a recent dip.
“The expanding UK PBSA sector, which to date has centred on the largest student cities, has the potential of altering the market further, challenging HMOs’ dominance over smaller cities and university towns.”
Andrew Hartley, Director of AMA Research, said:
“However, despite being driven by the demographics of an ageing population, the market faces increasing pressures of central government under-funding and stiff competition for available land from the volume house-builders, though recently announced additional funding for local authority social care budgets will help improve the situation in the medium term.”
Ben Denton, Managing Director of Legal & General Affordable Homes, commented:
“There is an urgent need to innovate new ways to provide stable homes for the millions of households on waiting lists. Legal & General remains committed to deploying institutional capital at scale into this sector, to deliver the volumes of social housing which society desperately needs.
“We have made a great start in executing our development programme, which now stands at nearly 3,500 homes all across the country.”
Stephen Kinsella, Chief Land and Development Officer at Homes England, said:
“This funding will enable local authorities to prepare their sites for development and to bring forward the construction of homes. New homes will then be built out at pace using modern methods of construction.”
Will the UK construction market continue to focus a lot more investment in demographics like the elderly, affordable housing and students?
