Students are taking out pay day loans to live in luxury flats in a bid to avoid poor standard accommodation, it has been claimed.
Since January plans to build about 3,500 new student rooms in Swansea and Cardiff have been submitted.
The National Union of Students (NUS) said many were struggling to pay high rents in a bid not to live in substandard house shares.
Property advisor David Feeney said the debt was “abstract” to most students.
In 2017-18 alone about 1,700 new student rooms will open in Cardiff, with the majority being studio apartments in high-rise flats in the city centre, including about 450 rooms in the tallest building in Wales, near the John Lewis department store.
A studio apartment in the Fusion development on Newport Road, with a cinema, private dining room and gym, costs £177.50 a week – or about £9,000 a year – while a room in a traditional house share can cost under £50 a week.
A spokesman for NUS Cymru said many students could not afford decent accommodation and were being forced to live in properties with damp, and even rats, while studying.
He said while landlords were subject to Welsh Government rules – under Rent Smart Wales – and standards were improving, there were huge divides in the quality of rooms with some “couch surfing” as they could not afford the rent and many relying on parents for help.
“Not insubstantial amounts of students are taking out credit cards and pay day loans and getting into financial trouble over all sorts of things including accommodation,” he said.
“Students just want a decent house.
“There are the ones who have the money to look at these ones in Cardiff with gyms and cinemas, but there are many who are struggling to make ends meet and just need a home they can afford to live in and run.”
Official statistics show the number of students going to universities in Wales is falling, with 131,185 students enrolled in 2011/12 compared to 121,950 in 2015/16 – a drop of about 7%.
Aberystwyth, Bangor, Cardiff Metropolitan, Glyndwr and the University of Wales Trinity St David saw a drop in students during the period.
But Cardiff University and Swansea bucked the trend – with Cardiff experiencing a 10% growth, while Swansea’s numbers rose by 18%.
Mr Feeney, of property advisors Cushman and Wakefield, said a huge gap was appearing in Wales as universities raced to attract students who wanted a more niche and luxury experience.
“If students are going to spend all this money – £9,000 a year in tuition fees – they think they must be able to get a job at the end of it and also have a great time,” he said.
“We are seeing real divisions in the market, the great quality universities that offer a niche are getting better – while the old polytechnics are struggling to react.”
Mr Feeney said while dozens of applications were in the pipeline at least 5,000 additional extra rooms were still needed in Cardiff to meet the growing demand – especially from international students.
“There are currently thousands of students in HMOs [houses of multiple occupation] who would be potentially willing to make the leap if the price was right,” he said, adding developers must adapt to students’ desire to live with their friends rather than in enclosed and isolating studios.
“This generation are very aspirational, but there is a big disconnect between what is being charged and what they can afford,” he added.
Cardiff University said it was currently planning new accommodation for up to 725 students at its Talybont campus, which may include larger living spaces and private dining rooms.
A spokesman said: “In a sector where expectations are changing it is vital to continually look at our offer to students.”
Swansea University said while its high-end student accommodation was “oversubscribed” there was still high demand for traditional house shares for the more budget conscious.
Wrexham Glyndwr University said as part of its Campus 2025 plan to transform the university for growing demand, new on-campus student accommodation would be developed, while Aberystwyth said it had made significant investments in its student accommodation in recent years, including the £45m state-of-the-art student residences at Fferm Penglais.