"There will also be some worry within the market about whether this post-Covid-19 period means there will be a greater propensity for ‘down-valuations’ to be made."
The ability for us to begin conducting physical valuations has been warmly received and it has been heartening to see our surveyors back out in the field, working through the backlog of cases that were left as a result of the Government response to Covid-19.
In a very true sense, this is just the start of the journey back to this ‘new normal’ and it’s understandable that there are a lot of questions being raised about the work of surveyors and how valuations will look in this post-Covid-19 environment.
There is, of course, an inordinate amount of speculation currently around house prices and values and how this is going to permeate into the sector, especially when it’s understandable that all stakeholders will be comparing values now with back then.
The situation has not been helped by a period where transaction levels dropped to such levels that we’ve seen a number of house price indices forced to pause their output – again, this fuels market speculation about what the real situation might be.
What we can say is that the process of valuing in a post-pandemic world will be broadly similar to how it has always been with the surveyor considering all the available data on which to base their opinion.
It shouldn’t be forgotten that surveyors always follow fluctuations in market values but they are not the cause of them; they don’t force them to happen and so, if properties begin to transact at below pre-Covid prices, then surveyors will of course reflect that in the values they give, rather than the other way round.
Neither are surveyors clairvoyants, and nor are they expected to be. We can all guess, but no-one can definitively say what is going to happen to house prices in the future. For that reason, our mortgage lender clients want their surveyors to value at the date of inspection, not as it might be in weeks, months or years to come, and for those valuations to be an honest appraisal, and to reflect the data and the market as it is currently.
There will also be some worry within the market about whether this post-Covid-19 period means there will be a greater propensity for ‘down-valuations’ to be made. Firstly, surveyors take issue with that phrase... they believe their valuations are true valuations, neither up nor down - but how many, if any, valuations might come back ‘below expectation’ is simply unknowable at this point, although historically we can see plenty of data to support the facts that when it comes to periods of recession – which we are now on the brink of given the latest economic figures – they often result in less demand, falling house prices and therefore lower valuations.
However, we should also stress the point that we are just days into conducting physical valuations again – and only currently in England – so it is far too early to tell what the real impact of Covid-19 will be.
For instance, there will be some debate about how lenders might address LTV levels based on prices and valuations going forward – but that’s a question they’re better placed to answer than ourselves. And what about certain property types post-Covid-19? How for instance will the values of high-rise properties, those with no gardens, HMOs, etc fare? These may well be property types which become less popular as both sentiment and legislation/guidance changes. Again, if surveyors see the evidence of this in the market, they will reflect it in the values, but they won’t pre-empt it.
As ever, it’s possible some valuations may not satisfy some advisers and their clients, but it’s important to recognise these are provided for the lender’s purposes and that customers have always been able to contact their lenders to appeal the valuation – that has not, and will not, change.
What we can be certain of is that while it’s clearly a huge positive to have physical valuations taking place again, the real priority is the safety of both our surveyors and the householders. We are therefore working with all parties in order to facilitate these inspections and to help the mortgage market begin its process back to the ‘new normal’.
