Increased demand for student housing has helped university towns across the UK record a 22% hike in average house prices, according to new research from Halifax.

What’s the latest?

House prices in university towns have soared by nearly £40,000 during the past three years – the average time it takes to complete an undergraduate degree.

The typical cost of a property in one of the UK’s 65 towns with a university has risen by 22.5%, or £1,074, a month since 2014 to stand at £210,845.

The increase is even greater over a five-year period, with property values in these locations jumping by £57,883 or 38%, according to mortgage lender Halifax.

Russell Galley, managing director of Halifax Community Bank, said: “While it is well documented that the student housing market can be lucrative for private landlords receiving monthly rental incomes, this research also indicates the potential earnings from bricks and mortar alone.Above: Close to Reading town centre and the local university, this one-bedroom purpose-built flat, available for £200,000 could be an ‘ideal investment’, according to the agent

Why is this happening?

The increase in the value of properties in university towns is likely to have been driven in part by increased demand for housing due to the need for accommodation among students.

But much of the rise is likely to be down to the general increase in property values seen during the past few years.

While average house prices in university towns have risen by 22.5% since 2014, they have increased by 18% across the UK as a whole.

It is also worth noting that the university towns that have seen the biggest gains in property values are those that are located in southern areas of the country, where house price rises have been strongest.Above: This two-bedroom maisonette in Brighton, available for £300,000, is close to public transport links with frequent access to universities

Who does it affect?

Above average house price growth in university towns may seem like good news for parents who are considering buying somewhere for their child to live while they study.

Not only could they benefit from an increase in house prices during the period, but they might also make money through renting out spare rooms to other students, as well as saving cash on accommodation costs for their own child.

But anyone considering doing this should weigh up the costs carefully.

House price inflation is expected to be slower in coming years, with many economists pencilling in gains of just 2% for 2017 and 2018.

Meanwhile, there are considerable costs associated with buying a property, such as stamp duty, including the 3% surcharge for a second home, and conveyancing fees, as well as estate agents’ fees when you come to sell it.

Anyone planning to rent out a property to three or more students in England and Wales will also need to obtain a house in multiple occupation (HMO) licence.Above: In Guildford, this three-bedroom semi-detached home, available for £389,950, is just over 1.2 miles from the university

Sounds interesting. What’s the background?

The top 10 university towns with the highest price growth are all located in southern England (see the table below).

Guildford, home to the University of Surrey, has seen the biggest increase in house prices during the past three years at £105,362.

It is also the most expensive university town with average property values of £511,673.

It is followed by Uxbridge, home to Brunel University, where house prices have risen by £102,061 in the past three years, and Hatfield, where the University of Hertfordshire is based, at £88,829.

Bedfordshire, where the University of Bedfordshire has two campuses, has seen the largest increase in percentage terms at 42%.

At the other end of the scale, Paisley, where the University of West Scotland, is located is the least expensive university town in which to buy a property with average prices of £122,681, followed by Bradford at £127,643 and Hull at £134,938. Above: In Paisley, Renfrewshire in Scotland, and on the market for £59,995 is this  two-bedroom flat, close to the university

Top 3 takeaways

  •   House prices in university towns have soared by nearly £40,000 during the past three years
  •   The typical cost of a property in a university town has risen by 22.5% since 2014 to stand at £210,845
  •   Over a five-year period property values in university towns have risen by £57,883 or 38% 
Top 10 best performing university towns by house price growth since 2014
University Town
Average House Price 2014*
Average House Price 2017*
3 Year % Change
3 Year £ Change
Guildford
£406,310
£511,673
26%
£105,362
Uxbridge
£339,213
£441,273
30%
£102,061
Hatfield
£305,658
£394,487
29%
£88,829
Bath
£297,216
£384,386
29%
£87,169
Bedfordshire
£200,086
£284,707
42%
£84,621
Cambridge
£314,492
£397,170
26%
£82,678
Reading
£306,865
£385,338
26%
£78,473
Oxford
£348,003
£424,258
22%
£76,255
Brighton
£286,814
£362,618
26%
£75,804
Chelmsford
£260,291
£334,808
29%
£74,517
University Towns Average
£172,179
£210,845
22%
£38,666
Source: Halifax, 12 months to July
 
Top 10 most expensive university towns – 2017
University Town
Average House Price 2017*
Guildford
£511,673
Winchester
£458,228
Uxbridge
£441,273
Oxford
£424,258
Cambridge
£397,170
Hatfield
£394,487
Reading
£385,338
Bath
£384,386
Brighton
£362,618
Chichester
£357,989
University Towns Average
£210,845
Source: Halifax, 12 months to July

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