The research, based on analysis by estate agent Benham and Reeves, suggested that a total of 390,285 homes were down valued by the surveyor on behalf of the mortgage lender, on the basis that the transaction price agreed by buyer and vendor was too high.
And Benham and Reeves suggested that lender caution, sparked by rocketing house prices, was at least partly to blame for the significant number of transactions put at risk by a valuation that is lower than expected.
Down valuation hotspots
The research throws up some significant regional variances. For example, in Wales almost two-thirds of property transactions were down valued by surveyors, the highest proportion of any area in the UK, ahead of 59 per cent in London and 58 per cent of deals in Yorkshire and the Humber.
By contrast, only a little more than a quarter of transactions in the South West (26 per cent) and the East Midlands (27 per cent) were down valued.
Across the UK as a whole 43 per cent of property transactions suffered a down valuation.
However, there is a significant difference in the volume of transactions in different regions, and therefore the number affected by down valuations. The South East saw the highest number of individual deals impacted at 60,327, ahead of the North West at 54,043 and London on 47,769.
The study suggested that the average down valuation will knock between £5,000 and £10,000 off the property price.
A greater degree of caution
Mard von Grundherr, director of Benham and Reeves, said that down valuations can be a “real thorn in the side” of buyers and sellers alike, and noted that while they are often the result of over expectant sellers setting too high a price, the firm is also seeing more lenders request “a greater degree of caution” from valuers given the scale of house price rises of late.
According to the latest house price index from the Office for National Statistics, house prices grew by 13.2 per cent in the year to June, the highest rate of annual growth seen since 2004.
Von Grundherr continued: “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.
“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.”
