As the UK begins its tentative return to normal life, almost every sector has had to make serious adjustments to everyday practices, to sustain business activities.

The property sector is no exception. But as the industry re-opened in the UK, I noted with a sigh that a long-standing urban myth has resurfaced – that valuers have dispensed with empirical data in favour of supposition and speculation and are routinely reducing valuation figures.

This misconception is perhaps fueled by anticipation of market uncertainty, a shrinkage of the economy, and a potential impending recession. Certainly, the particularly unhelpful term, ‘down-valuation’ (where a valuation is less than the estimated value of the property) has been seen in the media with more frequency, Covid-19.

There really is no such thing as a ‘down valuation’. What we are seeing are over-estimates; a phenomenon that has always permeated the market. When comparing the professional opinion of a qualified valuer (who is fully accountable for his or her advice) with the ‘hope’ value ascribed to a property by applicants who may have a financial need to achieve a certain LTV (and therefore an interest in the highest possible value), the valuer’s professional opinion must surely be the benchmark against which other opinions are judged?

Nobody challenges a conveyancer’s objective advice and asks them to remove comments which threaten to halt or revise a transaction. Both the surveyor’s and the conveyancer’s advice are fundamental to mitigating risk for all the stakeholders, so it is dismaying that they can be viewed so differently.

Over-estimates occur far more frequently on re-mortgage cases than on purchase cases, where there is a clear agreed price between two parties against which to refer. e.surv holds extensive granular market data on this phenomenon by postcode sector, dating back to 2008, and it is clear from this rich data that the level of over-estimates rises at times of rapid change in the market. When prices are moving up rapidly, human nature tends to drive optimism that a given property will have grown at the top end of all possible ranges of change, if not above! Equally, when prices have been seen to fall, there is a tendency to believe that ‘your’ property will not have suffered as badly- again with little basis, save for a desire for this to be the case.

In early 2009, following the financial crash, our data shows over-estimate levels as high as 50 per cent in some areas. This was consistent, irrespective of the valuer or lender involved, as desperation and a crashing market combined to drive a rash of highly optimistic estimates in the face of objective evidence.

More recently, the level of over-estimates has been slowly climbing since Q2, 2019, a likely consequence of the greater proportion of remortgage cases in the market versus purchase.

Of course, there is some appeal to assuming a Covid-based reason behind any recent rises, and it seems reasonable to presume that such a sustained and disruptive period could have some impact on the market.

However, to date, there is no strong evidence or consensus of an overall trend in property values. To illustrate this, the Halifax and Nationwide indices reported overall annual movements to June of +2.5 per cent and -0.1 per cent respectively, for the UK. The delayed release of Land Registry data on actual Covid sales, further complicates analysis. Clarity will take some time to emerge and it is our view is that the market has been in ‘suspended animation’ rather than experiencing any major movements. Be assured that this is the context against which valuers will form their advice- not an overarching assumption of significant price drops.

Lockdown and the UK housing market

Without doubt, Covid has presented a challenge to the housing market unlike any other. The easy comparison to reach for is the last financial crisis, but the Coronavirus crisis has introduced a very different set of difficulties.

The biggest barrier to activity in the property market has been the necessary imposition of social distancing measures. The need to contain the virus meant that many of the usual market mechanisms had to be re-thought, potentially slowing and even halting transactions. This did not, however, mean that demand waned. Indeed, throughout the period of lockdown, the anecdotal feedback we collated from estate agencies nationwide suggested that enquiries were plentiful. And, unlike the last financial crash, lenders have remained keen to lend and thus far, applicants are not in short supply either. To meet this demand, all stakeholders have been forced to adapt and, from virtual tours to desktop valuations, new solutions, protocols, and practices have been enhanced, developed and implemented.

At e.surv, we were fortunate to have already developed our own bespoke desktop valuation solution – the e.surv Remote Valuation. The Remote Valuation solution proved flexible enough to be tailored to a broader range of property and mortgage types. While widespread deployment of the Remote Valuation solution meant working closely with lenders to agree upon revised risk criteria, it enabled us to support the market with accurate, evidence-based valuations aligned with RICS protocols.

Under the RICS standards, valuations are typically based on three similar (“comparable”) transactions in the local area, along with the professional insight and local market knowledge of the valuer. These RICS protocols and fortified internal valuation controls underpin all our valuation activity, irrespective of methodology. It is a framework that assures the accuracy of our valuations – whether desktop-based or physical – and safeguards against speculation or presumption.

Assuring accuracy

As lockdown eased, many valuation providers resumed physical inspections to timescales based on their interpretations of revised guidance. The challenge now is to ensure that this period of hiatus and a reduced availability of data does not impact the accuracy of valuations. Valuers need to apply even more diligence when establishing the basis of their advice.

In summary

While it’s easy to understand where speculation around valuation practices comes from, lockdown has perversely proved a period of consistency and continuity for some aspects of the property market, despite unprecedented circumstances. This is testament to the way the industry has come together, leveraged technology, and remained focused on supporting its customers through a period of uncertainty.

My request is that in keeping with a professional property valuation, let’s base our perspective on real data, not distracting scare stories. In pursuit of an efficiently functioning market, all stakeholders in the process owe that to each other.

Richard Sexton is director of e.surv