The boom in buy-to-let investing has had only a moderate impact on rising house prices, new research has found, challenging the belief that buy-to-let investors have priced first-time buyers out of the housing market. Financial Times

The rush of buy-to-let investors on to the housing market, particularly since 2003, pushed up house prices by an additional 7%, according to an independent body that advises government on housing market affordability.

The study, from the National Housing and Planning Advice Unit, suggests the flood of new buy-to-let mortgage issuance in the past five years is not responsible for the sharp drop in first-time buyers over the same period.

Buyers of an average house today who took out a 100% mortgage are making monthly payments just £90 higher than if there had been no buy-to-let investment, the NHPAU says. If buy-to-let lending is stripped out, the average house price in the second quarter of 2007 would have been £169,000 rather than £183,000. Interest rates, the rising number of households and constrained supply have been far greater contributors to house price inflation, the study concludes.

Analysts Capital Economics suggested that buy-to-let investors had prevented the market softening sufficiently to allow new buyers on to the housing ladder. Capital Economics found that buy-to-let now accounted for one in every 13 mortgages; at the end of 2003 the ratio was one in 27 loans.

The findings suggest that the key for first-time buyers was affordability, defined as the proportion of national average take-home earnings absorbed by a new mortgage.