Article | Intelligent Investment
What does the latest application data tell us about demand for the upcoming academic year?
July 13, 2023 5 Minute Read
The latest data from UCAS reveals undergraduate applications for the forthcoming 2023/24 academic year at this point in the cycle. This is the final data release before A-level results and demonstrates the continued strength of demand for higher education in the UK. Total applications for the upcoming year are 667,650, 2% down from 2022/23, but 4.6% up on 2019/20 (the last full year prior to the COVID-19 pandemic). The decline is driven by a drop in year-over-year (YoY) domestic and EU applications of 3% and 3.3%, respectively. Applications from domestic 18-year-olds remain the second highest on record and international students have still increased, with non-EU students driving the growth in applicants.
Similar to the last five years, international students make up 21% of total applications for the upcoming year, demonstrating the UK’s continued popularity as a global study destination. International applications have increased by over 2% for 2023/24 to 138,050 students – the second highest on record and the highest since 2020/21, indicating that global mobility is recovering following the pandemic. 100% of this growth has been driven by non-EU students, whose applications have reached 115,650 in 2023/24 (up from 111,720 in 2022/23), further driven by the 2020 changes in post-study visa regulations which allows students to remain in the UK for an additional two years. This is despite the continued anti-international student narrative from the UK Government, demonstrating how the desire for a UK degree transcends Government rhetoric. Although Chinese students continued to have the highest number of applications in 2023/24, they have decreased by 2.2% from 2022/23, possibly due to political tensions and the growing reputation of Chinese universities. The most robust international markets continue to be India and Nigeria, with YoY growth in applications of 8.7% and 5.4%, respectively. Demand for UK higher education from the UAE is the highest on record and continues to grow, with YoY increases of 19.5% and 16.5% in 2022/23 and 2023/24, respectively.
Following the Brexit related changes to tuition fees in 2021, applications from the EU have continued to decline by a further 3.3% to the lowest number on record (22,400). Non-EU students have more than backfilled this decline to date, highlighting that this cohort has insulated the sector from the effects of Brexit.
From 2019/20 until 2022/23, all university tariff groups saw increases in applications, likely due to the counter-cyclical nature of higher education where difficult employment conditions encourage the population to study, in addition to domestic participation and demographic changes. The latest application data has shown that applications for medium and lower tariff providers have declined by 3% and 5% YoY, respectively. This decline has mostly been seen in applicants aged 25 and over. Applications for higher tariff universities have remained consistent with the previous year at c. 1.25m. In 2022/23, many higher tariff providers had to limit their intake of students from over-recruitment in 2020/21 and 2021/22 (when predicted grades were used as a proxy to A-levels during the pandemic). This tariff group could be forced to continue managing acceptances for the upcoming academic year whilst undergraduates who started during the pandemic will be in their final year of study.
The continued growth in demand for higher education has led to increased demand for PBSA, which has surpassed supply. Although there has been a modest decline in applications from this point in the cycle in 2022/23, they remain 4.6% higher than in 2019/20, indicating that demand for higher education remains, despite the “return to normal” post-pandemic. With 734,000 student beds estimated to be operational in 2023, the gap between supply and demand already stands at over 580,000 students nationally, without accommodating the new 2023/24 intake. Barriers such as rising construction costs, difficult planning conditions, and inflation will continue to hinder development of new PBSA, further leading to supply not keeping pace with demand.
This imbalance in supply has led to strong occupational growth, as evidenced by Unite Students reporting 98% occupancy for 2023/24 as at July 2023 (compared to 91% at the same time last year). This, in addition to increases in operating costs (caused by increased utility prices and inflation), have led to strong rental growth. This further reinforces the attractive nature of the PBSA sector providing further opportunity for investment and development.
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