End to buy-to-let boom could benefit first time buyers

03-Sep-2007

A leading industry figure has said that the buy-to-let boom is coming to an end because of rising rents and lower yields, potentially paving the way for more first time buyers to succeed in their property-purchasing aims.

Ability Group chairman Andreas Panayiotou has suggested that house prices are overvalued by 20 per cent, with too many investors moving into the market despite the limited returns now available, according to the Financial Times.

Mr Panayiotou added that yields from such investments were now lower than those achievable via a bank account.

"What's the point of accepting a yield of three per cent when you can get six per cent in the bank?," the Financial Times quotes him as saying.

"I think everything is over-valued by 20 per cent, things have been getting way out of control. Prices need to drop to bring returns above the cost of funds," Mr Panayiotou added.

However, last week Paragon Mortgages said that the buy-to-let sector was providing support to the market as a whole because of its stable returns and the role it plays in helping house those who cannot afford a property of their own.

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