Almost 400,000 property transactions were down valued last year, as more lenders probe valuations amid a rapidly rising house price market.

An estimated 390,285 homes have been down valued by surveyors working on behalf of lenders, who believe the price agreed by both buyer and seller was too high, according to data from Benham & Reeves.

The estate agent says the average down valued property across the UK saw the price fall by between £5,000 and £10,000 last year.

It says a mid-range drop of £7,500 would see the average UK property down valued by 2.8%.

UK house prices rose by 7.6% on an annual basis in July, the latest index from Halifax reported this month. This puts the price of the average home at £261,221.

Benham & Reeves analysed property market transactions over the last 12 months and referenced this to devaluation research from finance data group Bankrate.

The South East is the region that saw the most transactions hit by a down valuation, 60,327 down valuations out of 137,107 homes sold in the last 12 months.

At 59%, London is home to some of the largest levels of down valued homes of all UK areas. Benham & Reeves estimate that 47,769 of the 80,965 homes sold across the capital in the last year were subject to a down valuation.

The North West also saw some of the highest levels of value adjustments during the selling process, with 54,043 of the 96,506 homes sold in the last year being down valued.

Half of all transactions in Northern Ireland were down valued, but because a lower level of homes were sold in the region, means that its total of 12,346 down valued transactions were the lowest in volume of all areas in the UK.

A regional study of how down valuations affect price, shows that properties in the North East saw the largest decline with a 5% fall, along with Northern Ireland declining by 4.9% and a 4.3% slip in Scotland

In London, where house prices are at their highest, down valuations accounted for a drop of 1.5%.

Benham & Reeves director Marc von Grundherr says: “Down valuations can be a real thorn in the side of those eager to progress with a property transaction but unfortunately they are a prevalent occurrence within the UK property market.

“They often occur due to over expectant sellers setting their asking price too high but we’re also seeing more lenders request a greater degree of caution by valuers in a market where prices are climbing at a rate of knots.

“As a seller, you can look for a new buyer purchasing through a different lender and hope they agree on the value of your home.

“Or you can hold tight until values increase at the risk of losing your buyer or simply accept the lower value placed on your home.

He adds: “As a buyer, you can also negotiate with the seller or lower your offer, or you can get the property valued by a different surveyor and lender.

“Otherwise, you face getting a loan to cover the shortfall or bumping up your deposit to cover the cost.”