Britain is filled with buzzing university towns – provincial, suburban locations where hundreds of thousands of students head to study each year. Many of these areas are also witnessing booming house prices, with new research by high street lender Halifax revealing that property prices in university towns in the UK rose by an average of more than 22% over the three years of a degree course.
According to the findings, which analysed 65 university towns across Britain, the average house price in these areas has risen from £172,179 to £210,845 in the past three years, an increase of £38,666. This is equivalent to growth of £1,074 per month or 22.5% since 2014.
Where are the biggest price increases?
The top growth areas are all located in southern England. In fact, the top 10 university towns with the biggest house price growth are entirely made up of locations in the Home Counties and London’s commuter belt. Guildford, often considered to be the county town of Surrey and home to the University of Surrey, leads the way, with average house prices in this large commuter hub going up in value by £105,362 in the last three years.
The Surrey town, which is home to a prestigious School of Art and has a long, varied and at times controversial history, was also revealed to be the most expensive university town in the UK. Its average house price of £511,673 is almost two and a half times higher than the average for all university locations.
The next priciest university town was Winchester – the historic former capital of England – which has an average overall asking price of £458,228. Uxbridge wasn’t far behind, with the West London town (home to Brunel University) registering an average price of £441,273. The two most prestigious university towns in the UK – Oxford and Cambridge, home to the most iconic higher education establishments in the world – were next up. In the Oxbridge battle, Oxford won out with an average house price of £424,258, while in Cambridge it was £397,170.
Which locations have recorded the highest growth?
For the biggest percentage increase, though, we must head to Bedfordshire. The county – home to the University of Bedfordshire – has seen house prices rise by 42% (from £200,086 to £284,707) in the last three years.The next biggest percentage growth was seen in Coventry, where there has been a 35% increase in house prices (from £154,573 to £207,974) in the same time period.
Where are the more affordable university locations?
At the other end of the spectrum, Paisley (home to the University of the West of Scotland) is the least expensive student town, with an average price of £122,681. To put that in context, this is just a quarter of the average price in Guildford.
Other more affordable student towns included Bradford (£127,643), Hull (£134,938), Sunderland (£138,548) and Middlesbrough (£142,412). Typically, houses prices in Yorkshire and the North East are the cheapest in the whole of England – which means many buyers and investors looking for a bargain tend to head for these regions, where rental yields are also usually strong.
A profitable move for property investors?
It’s long been known that the student housing market is a potentially lucrative one for landlords and investors – with high demand, regular monthly rental income, and the ability to let the home to other people outside of term time – but capital gains on student properties can also be high. The bricks and mortar alone in popular university towns is now worth plenty, even before you factor in rental incomes.
As such, many parents are choosing to purchase properties that their children can live in while carrying out their studies. In the last year, this has proven to be an especially canny – and profitable – move. In the best-case scenarios, these parents could have witnessed an average gain of 22.5% on the value of their property. What’s more, they may also have received rental income from their child’s housemates or flat-sharers – making their investment doubly lucrative.
While student property has in the past been seen as a potentially risky investment, despite the obvious advantages, the landscape of student housing has changed somewhat with higher tuition fees and the demand for a better kind of living experience.
With students paying so much for their degrees, they are abandoning the more traditional student lifestyle of questionable abodes and partying and focusing more on their studying. Consequently, the demand for more bespoke, high-quality student accommodation – of the sort that won’t be ruined by house parties or pre-drinks – is also on the rise.
How have prices grown since 2012?
Halifax’s research also looked at house price growth in the 65 towns over the last five years – and found that price increases during this time have been even more substantial. Growth averaged £57,883 (or 38%) across the 65 university towns, peaking as high as £169,038 (or 74%) in Hatfield, home to the University of Hertfordshire and with an average house price of £394,487.
Since 2012, there has been at least a £100,000 increase in average house prices in another eight university towns, including Cambridge (up by £152,662), Uxbridge (up by £141,171), Oxford (up by £138,705) and Reading (up by £137,626).
On one level, the rise in house prices in university towns is reflective of the house price increases across the country. It could also be a reflection of the ripple effect – where people move out of major cities for more affordable locations elsewhere, which in turn pushes up house prices in these areas as demand soars above supply.
Equally, while the current fundamentals of the market remain the same – low supply, high demand and a desire by government to keep house price growth steady and on an upward trajectory – it’s no surprise to see house prices booming, especially in buzzing university towns.