With the UK finally emerging from a lockdown that began in mid-March, the question on the lips of every buyer and seller of property is likely to be the same – what’s my house worth now?

The answer is a complex one, and the lack of data available in a market which saw virtually no sales at all for several months means many expect property values to fall, at least temporarily, as the market struggles to start up once more.

Key to the question is the valuers themselves – employed by mortgage lenders to ensure that their investments are solid.

Acting on behalf of the lender, the valuer is keenly aware of their liability should a property be repossessed in the future and found to be worth less than their initial assessment.

In the wake of a crisis like Covid-19, it is uncertain how many jobs may be lost, and how many people may find themselves unable to make their monthly mortgage payments.

Down valuations

Repossessions spiked after the 2008 crash, and experts predict similar could be on the way as 2020 moves into its second half.

This has led some to speculate that valuers will act with an excess of caution, which may lead to a substantial number of down-valuations.

Ultimately of course, one may argue that the value of a property is subjective – reliant solely on its worth in the eyes of its buyer.

The reality is that valuers will use data including sale prices of similar properties in the area, the price paid for the property last time it sold, often (though not always) in combination with a physical inspection.

With recent sales data unavailable, and physical inspections still limited, it’s only natural for people to assume that valuers will err on the side of caution.

Unique situation

However, one must also bear in mind several factors, not the least of which is that the Covid-19 crisis is not similar to the 2008 crash.

The property market has paused and financial markets have taken a hit, but the same toxic debts which almost toppled big beasts like Halifax and Lloyds are no longer possible.

A combination of extensive government support through furlough and business loan schemes, as well as mortgage holidays provided by lenders, means that the impact of the crisis will likely not have the same sledgehammer impact on the market as the 2008 crash.

What’s more, the fact mortgage lending above 95% has long since been a thing of the past means that far fewer homeowners are likely to find themselves in a position of negative equity.

All this means, of course, valuers will be cautious – but that caution is likely to be far less excessive than what was experienced over a decade ago, and also likely to last for a far shorter period.

Raring to go….

Though it is true that job losses may mount up as the full cost of the lockdown is counted, it’s likely that most of these will be in those economic sectors where home ownership is not particularly prevalent, such as retail and small service businesses.

The self-same economic support the government has provided to the UK economy has meant that most service businesses and professions have managed to remain functional and in some cases even thrived during the crisis.

As a result this is not a blanket recession and it’s highly probable that the homebuying sector, other than first time buyers, will have retained a degree of economic security unseen in previous crises.

Overall when one looks put things in detail there is absolutely no reason to assume the ‘one size fits all’ catastrophe that many seem to be predicting.

Indeed, after an extended period of being stuck in their home it’s likely frustrated homeowners will either be raring to continue their pre-Covid sales and purchases, or are simply sick of the same four walls and looking for change.

With a potentially buoyant market likely to return in a matter of weeks, prices will steady and comparables will become readily available.

It’s certainly possible that we will see a dip in overall property prices at first between sensible caution on the part of valuers and understandable over-exuberance on the part of estate agents, but I find it unlikely in the extreme that we are in for the extended campaign of ‘deliberate down-valuations’ that some commentators are predicting.

Like so much though, we are in uncharted waters as the nation emerges from its enforced hibernation, and only time will tell in the end.

David Hannah is Principal Consultant of Cornerstone Tax