Surveyors down-valuing are causing more transactions to collapse, says Bank of England

Increasing numbers of transactions collapsed in the third quarter as surveyors down-valued properties, the Bank of England says.

The central bank’s latest summary of business conditions, based on feedback on the economy among 12 regional estate agents, said the housing market has softened, especially in higher price brackets.

The feedback from regional agents said: “There were more reports of transactions falling through due to surveyors down-valuing properties, reflecting concerns about falling prices.”

The report also warned that while mortgages have become cheaper, home loans are only going to those with the cleanest credit record.

It said: “Help to Buy was regarded as crucial to sustaining demand among first-time buyers. In the residential mortgage market, both lender and broker contacts reported that competition remained intense, driven by new market entrants and low funding costs.

“However, this competition was mainly concentrated on customers with the cleanest credit history. More customers were taking out fixed-rate deals; mortgages with longer terms, in many cases over 30 years, were becoming more popular.”

Meanwhile, a report by the Resolution Foundation think tank has highlighted the struggle millennials – those born in the early 1980s – face when getting on the property ladder compared with previous generations.

The research says millennials are four times more likely to rent and half as likely to own their own property than baby boomers – those born between 1946 and the mid-1960s – at their age. Millennials also spend on average 23% of their income on housing compared with 17% among the post-war generation.

The report warns that the younger generation also face higher housing costs, smaller properties and longer commutes.

Lindsay Judge, senior policy analyst at the Resolution Foundation, said: “Across the generations, many are worried about why today’s young adults have it so hard when finding a secure place to live.

“Britain’s housing catastrophe has been 50 years in the making, but while its effects are widespread it is millennials who are truly at the sharp end. For older generations, at least rising housing costs have been accompanied by improvements in the quality and security of housing, as more families have been able to own their home.

“The big danger today is that young people are having to settle for lower quality, longer commutes and less security in order to afford a place to live, despite spending a record share of their income on housing.

“It is vital that all political leaders recognise the scale of Britain’s housing crisis which is placing an ever greater strain on families’ living standards, so that their response is suitably radical.”

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  1. Will

    More academic nonsense using statistics that does not reflect the changes in housing legislation. The baby boomers could not rent due to the  Rent Acts making it almost impossible to rent therefore, forcing a virtually purchase only market.  This type of fact is NOT used when coming to these misleading and incorrect conclusions.

  2. Will

    Surveyors value property and that is based on the guidelines they are told to work to.  If the banks and building societies had not been such a bunch of unethical sharks (particularly in the 1980’s and 90’s) who try to recover their loses from bad lending when markets decline their guidelines may have been slightly more acceptable. I  guess this view will be disliked, particularly by agents, but history tells a story.

  3. BobSmeaton01

    The “Help to Buy Scheme” is part of the problem of the main market in that it means the only houses the young can purchase are new build,[ No one tells them what happens when they come to sell and prospective purchasers cannot get the same package], as they cannot raise the deposit for existing houses.The owners of the existing houses cannot then move on except at a large drop in price to purchase a larger house and thus the main market is hampered. If security is the reason ,then it does not make sense ,since the Banks not giving 95% loans on existing houses is causing a drop in value making less secure what they already lent on.

    It was reported recently with shock and amazement that house prices ,mainly in the North had not recoverd to 2007 levels.Well ,not giving reasonable rates on 95% mortgages is the main reason, and is causing the lower transaction levels.

  4. Bless You

    Surveying is a jobs for the boys…job.   If they were so clever how did they allow all those sales to go through before the crash. How do they down value a 3 bed semi freehold by £2k but then let a shared ownership house go through at £20k over market price….


    i think its time property was made into a socialist category. Property can not go up in value, it isnt a fair system.

  5. Mark Connelly

    Will, I make you correct on both counts. Banks actively used surveyors at the height of the boom a decade ago to manage LTV’s. They would headline 90% lending then surveyor would down value by 10% despite you supplying numerous comparables and on a £300,000 purchase where the client thought they were putting in £30,000 they were suddenly asked to stump another £27,000.  Result, aborted purchase.

    It’s quite amusing watching the same old smoke and mirrors play out decade after decade.

  6. James

    A ‘correction’ in the Housing Market has been coming for a long time. It should have happened in 2008 when quantitative easing and exceptionally low interest rates staved it off.

    We now have a generation who don’t understand the cyclical ups and downs of property….and indeed of business….. and life in general!!!

    A big shock is on the way for many.


    1. Will

      It did happen in 2007/8 and I was lucky to able to take advantage of it.  You need to read the market and not be a lemming!  It is always the lemmings that complain because it did not work for them.


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