Recent reports indicate an even more insidious trend emerging within the UK property market. Mortgage lenders are increasingly seeing an increase in property “down valuations” performed by surveyors. This trend has created a huge barrier for potential first-time buyers, especially in expensive regions like London and the south east.
Vijay Rabadiya, a prominent mortgage expert, noted that most down valuations tend to be “moderate – usually between 2% and 5% below the agreed purchase price.” As needed as this assistance is, some properties are undergoing a lot worse markdowns. In one extreme example, this effectively slashed the value of a £3.1 million property to £3 million. This major down valuation resulted in the sale falling through. With some homes reportedly being chopped by 10% or more, this is raising fears from coast-to-coast for buyers and lenders.
Jonathan Alvarez Herrera, another major player in the mortgage industry saw a distinct rise in down valuations. We have noticed this trend in the mortgage market over the last several months. He pointed to areas like London as particularly affected, stating, “I have found the south-east and London particularly affected, but this is simply down to the fact that properties have a higher value.” This type of property sentiment is indicative of a much larger issue, as average markdown across all property types run closer to 10%. We have heard of other brokers seeing accurate valuations coming in 5-15% below recent sales comps.
The effect of these down valuations is real. Mortgage experts warn that they “are turning deals and lives upside down,” reflecting the challenges prospective homeowners face in securing financing. Patricia McGirr of Avaliable Lands expressed her dismay that even the best surveyors are undercutting values within weeks. She remarked, “Whether it’s lender caution, local sentiment or pre-budget jitters, valuations have become a postcode lottery.”
We conclude our focus on the UK housing market with some remarkable twists and turns in recent months. Official Land Registry data recently released for England showed that house price inflation was at 2.6% for the year to September. London followed the opposite trend, having registered a drop of 1.8% in property prices during the same period. The disparity underscores the underlying challenges still present in the market.
One property down in London was just down valued by an astonishing 17%. The “guerilla” nature of this festival means moving parts could change, but that’s part of the excitement too! The Royal Institution of Chartered Surveyors (RICS) offered additional context, stating that “in reality there is no such thing as a ‘down valuation.’ What is being described is the difference between worth (to the individual buyer/seller) and market value.” They pointed out that, in many cases, the first client is the lender, not the mortgage applicant.
Similarly, surveyors are being cautious in their valuations. This has left many onlookers scratching their head as to what the future of the UK housing market holds.