Properties suffer ‘down valuations’ as banks fear house price falls

As many as half of the homes in some parts of the country are not worth what they are worth.

Home buyers have been left scrambling for cash as they can’t get a big enough mortgage to cover the sales price. The end of the post-pandemic property boom was feared by banks because of the cost of living crisis.

Anthony Harris, of Continuum, a financial advice firm which manages over £1.53 billion in mortgages and other assets, said he was seeing more than 50 percent of purchase applications being down valued at the moment.

He stated that this level is likely to rise further. There always seems to be more than two buyers who are prepared to enter a bidding war and push up prices further. The prices agreed are not being supported by the lender’s surveyors.

The home is down valued when the buyer and seller don’t agree with the valuation of the property. The prospective buyer needs to pay the difference between the valuation and the agreed sales price in cash or the purchase will collapse.

Mr Harris said that a couple buying their first home needed to find an extra 30,000 in cash. They had agreed to pay over half a million dollars for their home, but their lender valued it at more than half a million dollars. A family agreed to pay over half a million dollars for a house in West Sussex, but had to find another twenty thousand dollars after their high street lender reduced the value of the house.

Adrian Anderson said he expects mortgage valuers to be more conservative moving forward. The heat is coming out of the market and buyers are being a bit more restrained because of rising mortgage interest rates.