Unite Group was at pains to point out this week that the ‘profits plummet’ headlines that followed its 2025 results announcement were not truly representative of the company’s performance.

Mel Flaherty, PW deputy editor

Given the drop was driven by a revaluation loss of £73.7m (against a £239.6m gain by this metric the year before), rather than weaker underlying trading, its reaction is understandable.

Chief executive Joe Lister acknowledged there had been weaker demand in a small number of cities, but cited strong trading across the bulk of the firm’s portfolio, calling the overall performance for the year “robust”. He highlighted rental growth of 4% and occupancy of 95.2% for 2025-26.

However, these figures are book-ended by numbers that provide interesting comparison: on one side, last year’s 8.2% rental growth and 97.5% occupancy, and on the other, the forecast for 2026-27 income to be at the lower end of guidance, with rental growth between 2% and 3% and occupancy of 93% to 96%.

While this may not signal a dramatic change in fortunes for Unite, which has the income benefits from its recently completed purchase of Empiric Student Property to look forward to, it gives pause for thought, especially given the wider trends in higher education and the economy.

Eye-watering costs are turning a growing number of potential students off university altogether

As well as low supply and pressures on the private rented sector, the purpose-built student accommodation (PBSA) sector often underpins proclamations of its long-term growth potential with the rising numbers of applications to UK universities. Indeed, Unite’s results statement references the 5% rise in UK 18-year-old applicants for the 2026-27 academic year.

UK universities are, of course, still attractive to international students too, and the introduction of the Erasmus+ scheme in 2027 may reinvigorate their appeal to EU students after costs to attend rocketed following Brexit.

But the bigger picture is more nuanced. The higher education entry rate among UK 18-year-olds rose from 24.7% in 2006 to peak at 38.2% in 2021, then fell to 36.3% in 2025, according to a House of Commons research briefing published last week. And data shared for the first time by university admissions body UCAS in December shows that 89,510 UK 18-year-olds who secured a place for the 2025-26 academic year plan to live at home, up 7% on 2024-25.

Those with older children in their orbit are all too aware that these trends are likely going only one way. Increasingly eye-watering costs, not only while studying but for many years after, thanks to onerous interest on student loans, are turning a growing number of potential students off university altogether.

Rising youth unemployment and fears about the effects of the onslaught of artificial intelligence on the jobs market is not helping. More of those who do become undergraduates will commute from home, certainly not because it is what either they or their parents want, but out of necessity. And of those who do go and live in their university town, a higher number will be looking for more affordable accommodation.

The PBSA development boom doesn’t look set to end for a while – Knight Frank’s UK Student Market Update last week shows 10% year-on-year growth in annual investment to £4.3bn last year – but a slowdown may come quicker than many originally expected.