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Are we facing a valuer crisis?

by: Richard Sexton
  • 26/04/2013
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Are we facing a valuer crisis?
Before I saw the light and got into the serious business of property services, I wasted my time studying such trivial matters as climate change and global environmental catastrophe.

One concept that stuck with me was ‘phase change’. This is a description of a system that moves from a stable state to another state, very abruptly, often in an irreversible fashion.

A collapsing ice shelf is one example – a better one may be a man jumping off a cliff – on minute he is in a stable position, 300m up, but seconds later, he is at sea level and presumably somewhat less well organised.

The valuation provider industry has gone through a phase change in recent years. In 2007, the equivalent of over 7000 full time chartered surveyors were actively providing lenders with mortgage valuations. Today, the number is closer to 1500. So what? Well, let’s assume each valuer has an average capacity to undertake 4.5 mortgage valuations per day, 5 days a week, and 48 weeks a year. Total capacity would be in the region of 1.6m inspections.

There was £142.6bn of mortgage lending in 2012, which if we exclude AVMs and apply an average advance size means that that demand from lenders was something like 1.3m inspections.

Purchasers also sometimes commission a private survey and this would have meant another 300,000+ equivalent inspections, meaning that give or take, the industry was operating flat out in 2012 – and that’s before other users such as Housing Associations, Local Authorities etc also placed a call on capacity.

In August 2012, we had a glimpse of what the future might look like, when the holiday period combined with a peak in lending. Large parts of the supply chain buckled in what was thankfully a short lived event.

The CML predict lending in 2013 to be £156bn. If accurate, that translates in to circa 15% growth in demand. In fact, Q1 figures seem to suggest that we may be operating at a rate which is already in excess of that number. Next, consider that valuer retirement levels will undoubtedly outstrip new entrants in 2013.

The only reasonable conclusion seems to be that we find ourselves at the bottom of that cliff, with no express elevator to take us back up. However, there should be no need for immediate panic. We’ve got used to a world where valuations are turned around within 3 days, whilst mortgage applications can still take weeks.

Even If the valuation timetable doubled or tripled, it still wouldn’t be an issue, provided the instruction was issued early enough in the application process. 

Presumably with this in mind, several lenders have already moved to relax SLA to keep their supply lines open. If we have indeed hit the beach, lenders and valuers may as well pick themselves up, dust themselves off – and go for an exploratory paddle together.

Richard Sexton is director of business development at e.surv

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