- What Just 10% of Canadian students can find PBSA accommodation
- Why Canada’s student-housing supply has been outpaced by demand for years
- What next Despite current efforts to build PBSA, the country is still behind other nations
Canada’s student-housing market is facing a drastic supply shortage, creating an opportunity for significant investment in the space, according to Desjardins.
In a new economic report, the cooperative financial group noted that demand for student housing in Canada has outpaced supply for some time. As a result, just 10% of the country’s post-secondary student population has access to purpose-built student accommodation (PBSA). By comparison, 27% of students in the United Kingdom can secure such housing.
The group estimated that the PBSA supply pipeline would need to double to match the U.K.’s capacity level by the end of the decade. Currently, the number of student beds in Canada is forecast to increase 3.5% annually through the 2029-2030 academic year.
That makes the market “ripe for investment,” Desjardins said. However, it noted that that governments would have to remove some barriers to attract more private capital to the space.
“Student housing in Canada has been woefully undersupplied for far too long, contributing to skyrocketing rents across the country,” Desjardins said. “More purpose-built student accommodation (PBSA) needs to be made available to improve affordability for students and all Canadians.”
The lack of PBSA has forced an estimated 1.2 million students to rent in neighbourhoods around their universities, limiting the availability of housing for others in those communities, the report noted.
The shortage of such student housing also has driven rents markedly higher. Capitalization rates for PBSA stood at 5.25% in the second quarter, nearly a full percentage point above the cap rate for high-rise multifamily properties, at 4.38%.
“One of the big advantages for student accommodation is that there’s almost zero vacancy rate,” Kari Norman, an economist at Desjardins, told Green Street News. “You don’t get that with regular apartments.”
She also noted that student housing has regular turnover, which allows for rental increases in regions where rent control policies may impede them for long-term tenants.
Meanwhile, the Canadian government has limited the number of foreign students to the country in 2024, to 360,000, partially as a response to the country’s housing crisis. The admission rate is 35% lower than in 2023.
“This is further exacerbated by stagnant numbers of Canadian students attending [post‑secondary institutions],” Desjardins said. “But even with this potential decline in Canada’s post-secondary student population from current levels, the number of PBSA beds in the pipeline is still insufficient to meet expected demand.”
