@Viviennemary
I read the beginning of an article in the Telegraph today. The rest was behind a paywall. It said building society surveyors were downvaluing houses and a 10-15% drop is on the cards. Doesn't look like it from house prices I've seen. Unless big storm coming. I was expecting prices to drop by now but they seem to have gone up.
www.telegraph.co.uk/property/uk/property-purchases-collapse-surveyors-issue-lower-house-price/
I have access so I'll post the article for you
Property purchases collapse as surveyors issue lower house price valuations
Some home valuations have been £20,000 lower than expected
By
Adam Williams
24 July 2020 • 5:00am
Home buyers and sellers have been left in limbo as surveyors have dramatically reduced property valuations in the aftermath of the coronavirus crisis.
With house prices falling in many areas and transaction levels down, surveyors have started to issue more cautious estimates amid fears that properties could be overvalued. A lack of post-Covid housing market data has contributed to this issue, experts said.
If the valuation is significantly lower than the agreed sales price, this can cause mortgage lenders to withdraw offers, and sales to fall apart. This phenomenon is known as a “down-valuation” and occurs when a bank’s surveyor values a property.
Estate agents and mortgage brokers have reported cases where down-valuations have knocked tens of thousands of pounds off a property’s price. In one instance, a surveyor valued a property at £300,000 less than the agreed sale price.
Mortgage lenders can then withdraw offers if they believe falling house prices will cause the borrower to quickly plunge into negative equity. They may also lower the mortgage offer, leaving the buyer to make up the difference with cash.
Existing homeowners trying to remortgage their loan to a cheaper deal with another bank can also find down-valuations an issue.
Industry experts said lack of data was posing a major problem for surveyors, many of whom have been unable to visit properties in person.
Social distancing measures have caused the number of physical valuations to fall. Instead, surveyors have relied on computer models to determine house prices without visiting a property. However, as transactions have slumped in recent months, there is far less reliable data for valuers to base their decisions on.
There are generally between 90,000 and 100,000 property transactions in Britain in a typical month, but this figure slumped to 41,960 in April.
Transaction levels rebounded to 63,250 in June, but many of these sales were agreed before the crisis hit. Given that it takes months to complete a purchase, there are fears that these figures do not fully reflect recent house price falls. The Government’s own index has also been suspended since March.
Jonathan Harris of Forensic Property Finance, a mortgage broker, said he saw a home down-valued from £1.4m to £1.1m last month, a drop of 21pc. Mr Harris said the surveyor gave no justification, but he understood the drop was due to concerns about the market.
Jiten Varsani of London Money, another broker, said he had seen a home valued at £340,000 when a sale price of £360,000 had been agreed. He said that over-reliance on computer models could lead to properties being wrongly valued.
“My worry about automated valuation is that, without physically seeing a property, you might be comparing one to another down the road that is the same size but in exceptionally poor condition,” he said.
Jeremy Leaf, a London estate agent, said it was not uncommon to see down-valuations of 5pc.