At the end of August, some 460,000 university places had been allocated - up from 432,000 last year and just below the 465,000 clocked at the same point in 2011. Tuition fee hikes have had a bigger impact on applicant numbers, which are down 4.5 per cent to 633,000 since 2011. But given the excess of demand over supply, it's the latter that counts.
Supply depends mainly on government policy. Because tuition fees are lent to students by the taxpayer, universities cannot simply take on as many students as they please. But there are exceptions. Foreign students paying full fees operate in a completely free market. And universities are also now allowed to take on an unlimited number of applicants with ABB grades or above at A-level - expected to be some 120,000 students this academic year. At better universities, these exceptions seem likely to fuel further growth in student numbers, underpinning a strong rental market.
For private investors, however, this is only half the story. It's not sufficient to decide that the market is attractive; investors also need to find an attractive way into it. In this respect, far from shrugging off concerns, the student housing sector has been accumulating them.
The main culprit is the Brandeaux Student Accommodation fund, an offshore vehicle that owns a £1.2bn portfolio of purpose-built blocks under the Liberty Living brand. Although it is theoretically an open-ended fund, Brandeaux closed its doors to both redemptions and new subscriptions in July. It cited "uncertainty in the student accommodation market" precipitated by the failure of rival Opal Group.
Opal was the third-largest private student landlord in the country, after Unite Group and the University Partnerships Programme (and just before Liberty Living). Debt pushed it into bankruptcy in March. On top of loans amounting to about 70 per cent of the portfolio value, the group had interest-rate swaps that took its total liability-to-value ratio to an unsustainable 90 per cent. Owner Stuart Wall is reportedly suing RBS for mis-selling him the swaps - an insurance policy against rising rates - at what turned out to be the peak in 2007.
So what has this got to do with Brandeaux? The implication of the fund company's communications to financial advisers is that Opal's sale out of administration is blocking its own efforts to sell assets and thus meet redemption requests. This is plausible. James Pullan, a partner at property brokerage Knight Frank, says the complexity of the Opal deal - involving 17,000 rooms in 32 buildings split into five portfolios, with multiple bidders on each - has led to delays, creating an "unhelpful" hiatus in the investment market. Because purpose-built student housing is a relatively new asset class with limited liquidity, both investors and landlords are waiting to see how the portfolios are priced.
But there's also a less charitable theory about Brandeaux - that its assets are overvalued. A simple comparison makes the point. Liberty Living has 16,825 beds, each worth about £71,000 based on the reported portfolio value of £1.2bn. USAF, a £1.3bn institutional fund managed by Unite with equally diverse geographical exposure, has 21,835 beds - working out at a unit value of £61,000.
Brandeaux has itself betrayed nervousness about valuations. Its latest update warned investors not to draw pricing conclusions from the Opal sale, stressing "the potential for an acquirer to be looking to buy cheaply as part of a distressed sale". It is also odd that the company suspended its Ground Rent Income fund at the same time as its Student Accommodation fund. If the problem is Opal, why is it also hard to sell ground rents?
Whatever the truth, Brandeaux highlights the problems associated with investing in niche property funds. You may not get your money back when you want it, and it's hard to hold management to account. Fractional ownership schemes (student pods) are beset by similar problems, as we have reported at length.
There are two alternatives. The most obvious is to buy a house. This gives the investor complete control, and houses are much more liquid than purpose-built blocks. But buy-to-let is not an armchair investment, and it also involves a huge concentration of risk. The government is keen to reward universities that are attracting more applications and punish those that are not - so make sure you bet on a popular institution.
The compromise option, which I suspect will suit most investors best, is to buy shares. They offer immediate liquidity and the management of public companies, for all its faults, is reasonably transparent. The problem is the paucity of choice, yet this is changing. For many years only Unite Group, the market leader, was listed. It has long been on our buy list despite paltry dividends, reflecting its history as a developer. Then a more income-focused option emerged with the flotation of GCP Student Living in May. Encouragingly, the shares are up 9 per cent, and Mr Pullan at Knight Frank says more student housing Reits are in the pipeline. They are welcome indeed.
