“This is often labelled as a down valuation but, in my opinion, there is no such thing as a down valuation, it simply reflects a difference in opinion. One which is probably unsupported and driven by person specific factors, the other a researched and supported professional opinion of market value.”
Early signs of 'a gulf' in houses values
In August, brokers reported valuations up to 20 per cent short of agreed purchase prices, prompting them to open appeals with lenders to secure new valuations closer to sellers' expectations.
Two London-based brokers told FTAdviser they had experienced asking prices falling from £750,000 to a valuation of £600,000, and from £1.05mn to a valuation of £900,000.
Garrington Property Finders’ chief executive, Jonathan Hopper, said there was "a gulf between the reality of what what buyers are willing to pay and what surveyors are willing to let go through", and that this was "a widening gap".
Partly down to a lack of supply versus demand, estate agents have said inflated house prices are being driven, in part, by special houses getting lots of buyer interest, as well as by search engine optimisation on the big portals like Zoopla, Rightmove and On The Market which they say favour a 10 per cent uplift to asking price.
In a worst case scenario, if the housing market was to enter a recession and houses repossessed, lenders could theoretically sue the surveyors if a house price was at all inflated leading to a riskier mortgage on their books.
This is another reason brokers have cited as a reason for lenders' "cautious approach[es]" to down valuations.
ruby.hinchliffe@ft.com
