Stagnant housing market suffers losses due to reduced property appraisals
The UK property market is currently experiencing a surge in down valuations, a trend attributed to a combination of factors that have impacted the market in recent months.
Jack Tutton, director at SJ Mortgages, has noticed an increase in down valuations, a trend echoed by Adam Stiles, managing director at Helix Financial Partners, who recently had three properties downvalued by over £1 million.
The primary reasons for this trend include a rising supply of properties for sale, weaker buyer demand due to economic uncertainties, and specific regional weaknesses, particularly in London.
The inventory of houses on the market is at a decade-high, giving buyers more choice and bargaining power. As a result, sellers are adjusting their asking prices to remain competitive. London and Greater London, in particular, have seen significant monthly price falls, reflecting a more pronounced local market weakness.
Economic factors, such as rising unemployment and cost pressures on small businesses, increase financial uncertainty for buyers, reducing their willingness or ability to meet previous price levels. Additionally, the after-effects of Stamp Duty changes have led to more cautious pricing, as a surge in transactions earlier in the year has since cooled.
Despite these downward pressures, broader UK house prices have still risen modestly on an annual basis. However, the rise is uneven, accompanied by more frequent localized price reductions and increased down valuations.
Regions like the South West, which have seen stronger growth since the pandemic, have slowed significantly. On the other hand, more affordable regions, including the North West and Yorkshire and the Humber, are growing much faster than pricier parts of the country, like London and the South East. Largely less expensive places, especially Northern Ireland and Scotland, have posted particularly robust growth.
The glut of supply is evident in the current market, with 14% more homes on the market this time in 2024, according to property listing site Zoopla. The number of homes for sale is 16 to 19% higher than a year ago in London and the South East and South West regions of England.
The mortgage valuation process has been described as a "game of Russian roulette" by one landlord, with surveyors being accused of being overly cautious with the values they are putting their names to due to the stagnant housing market. In some cases, valuers have valued the same properties with significant differences, leading to disputes between sellers and buyers.
Stiles suggests that there needs to be more accountability and means for impartial appeal, as currently valuers are 'marketing their own homework'. The latest Halifax house price index for July found house prices rose 0.4% last month, after a pretty flat June and a drop in May, while the latest house price data from Nationwide shows prices fell by 0.8% in June, the sharpest monthly decline in over two years.
Sarah Coles, head of personal finance at Hargreaves Lansdown, stated that July saw the housing market warm up slightly. Despite these fluctuations, the overall trend suggests a market in flux, with buyers and sellers navigating a landscape shaped by economic pressures, regional disparities, and a saturated market.
- The surge in down valuations in the UK property market is linked to a combination of factors, including increased supply of properties, weaker buyer demand due to economic uncertainties, and specific regional weaknesses, particularly in London.
- Economic factors, such as rising unemployment and cost pressures on small businesses, have resulted in increased financial uncertainty for buyers, reducing their willingness or ability to meet previous price levels.
- The mortgage valuation process has been criticized as being overly cautious, with surveyors being accused of valuing properties with significant differences, leading to disputes between sellers and buyers.
- Sarah Coles, head of personal finance at Hargreaves Lansdown, suggests that the overall trend in the housing market indicates a market in flux, with buyers and sellers navigating a landscape shaped by economic pressures, regional disparities, and a saturated market, while investing in personal finance becomes crucial in such uncertain times.
