Everyone in the world of residential property is aware that transactions have dropped and in some areas, by a lot.
But Land Registry data that we’ve analysed reveals that the slowdown is much more pronounced in London and the South East and South West of England compared to elsewhere.
North-South divide
Our analytics director Johnny Morris crunched the data, and it shows that the number of homes sold so far in London during 2017 is down by 25% compared to last year.
In the South East, transactions are down by 19% and in the South West by 17%.
But here’s the big difference.
In Yorkshire and the Humber transactions are down year-on-year by just 9% and in Wales by even less.
Scotland has even seen an increase – of 5%. You get the picture.
But what concerns me more is what this means for lenders and buyers.
Valuation congestion
Such dramatic and regionally-focussed shifts in demand mean it can sometimes be difficult for customers to get valuations quickly enough during busy periods.
This is happening in the North of England, Wales and Scotland right now.
The imbalance between demand and supply when compared to just a few years ago – when London and the South were enjoying their boom – means it is sometimes taking longer to get surveys done in the regions.
Like our competitors, we cannot suddenly grow one hundred surveyors to cope with the extra demand. But there is an answer to this challenge that we are talking about with lenders. And that’s the opportunity that technology can offer.
This includes risk-based modelling, which can be used to deliver the valuations that lenders need without having to visit properties.
Alleviate pressure
It’s not appropriate for all lending decisions, but it can help alleviate the pressure when demand for surveying services is high. And it is technology and data which is already out there.
We are already working with a number of lenders to run their lending through our Valuations Risk Hub to determine whether a property needs a physical valuation or not.
A small number of lenders are already taking the lead in considering the valuation alternatives and embracing risk-based modelling.
As in many other areas of both the financial and property sectors the expansion in what digital and analytical technology can deliver is rapidly changing how homes are bought and sold.
The number of lenders taking technology on board is still small and I understand the anxiety of those who don’t.
But I believe attitudes to risk-based modelling need to change if surveyors and lenders are to get the best solutions to face the challenges of fluctuating demand for mortgages.
