House asking prices are still on the up, hitting a new record for the second month in a row. In May they jumped 0.6% - that’s £2,335 - taking the average asking price to £379,517, according to Rightmove.
The outlook is increasingly upbeat. Knight Frank has also revised its UK house price growth forecast for 2025 to 3.5%, up from 2.5%, and is now predicting a 22.8% rise over the next five years.
With more Bank of England Bank Base Rate cuts potentially on the cards – although the recent inflation figures might hold them back for a while - some forecasts are even suggesting rates could fall to 3.25% by the end of 2025, and even 2.75% by early 2026.
In that regard, market conditions are helping drive a busy remortgage market, as earlier predictions of a dip in product transfers begin to play out. Unlike product transfers, remortgages usually require a new property valuation, and this is when some in the market can start to hear talk of ‘down valuations’.
‘Down valuations’ are something of a misnomer – what is the surveyor valuing down from after all – but sharp value differences between agent/lender/surveyor make up only a small proportion of overall valuations. However when this is the case, they can obviously be frustrating, with the finger of blame usually pointed towards us.
Surveyors can sometimes be accused of being overly cautious in these situations but that’s not the case. A surveyor’s job is to ensure the market doesn’t get too carried away and that valuations remain realistic, based on comparable evidence rather than market sentiment.
Remortgage versus purchase valuations
So-called down valuations, or as some surveyors prefer to call them - over valuations - tend to crop up more often in remortgage cases than in purchase transactions.
There are a few reasons for this. News of rising house prices spreads quickly, and when borrowers see headlines claiming prices have jumped 15% over the past five years, they naturally assume their own home has followed this trend, especially if they haven’t remortgaged or had a valuation carried out in a while.
If a neighbour’s house appears to have gone up in value, that can reinforce their thinking. Add to that the rise in do-it-yourself online valuation tools, and it’s easy to see how homeowners might overestimate what their property is worth.
It’s also worth noting that when borrowers remortgage, they’re often aiming to secure the best LTV and rate they can. This may lead to a touch of unconscious optimism when they’re discussing their property’s value with brokers, particularly if an online estimate has already planted the idea that it’s worth more than it really is.
With purchases, things can be a bit more realistic. Estate agents will usually have carried out an appraisal of the property’s value which, while not a formal valuation, should still be based on local market knowledge and recent comparables.
Of course, agents can be ambitious, especially in a competitive market. But overall, purchase prices tend to have a bit more substance behind them than some homeowner estimates during a remortgage.
Not guesswork
However, it’s only the surveyor who carries out an actual professional valuation of the property. We’re not influenced by the LTV the borrower is aiming for, or by what the estate agent thinks it might sell for.
RICS-qualified valuers act solely on behalf of the lender. We use tried-and-tested methods based on comparable property sales, supported by data and analysis of local market activity. This ensures that valuations are not only realistic but evidence, providing lenders with a reliable basis for their mortgage decisions and that if a borrower defaults, the property could be sold to recover the loan.
While what’s perceived as a ‘down valuation’ can understandably be frustrating - especially for brokers trying to get cases through - it’s important to remember that surveyors are the only ones who actually carry out the valuation. As mentioned, technically, it’s not ‘down’ from any official figure.
With house prices expected to keep rising over the next year, it’s important to remember that a so-called ‘down valuation’ isn’t surveyors being difficult - it’s our way of protecting everyone’s financial interests.
