House prices – a valuer’s view
When working on a valuation we refer to various data on the state of the market. We have to consider evidence of sales as this gives a clear indication of of values, based on an open market. We will look behind sales, getting as much information as we can about comparables and the deals. For example property bought from developers (new build, barn conversions, etc.) may have incentives which effectively reduce the price paid.
We also look at market reports from the likes of RICS, Bank of England and large agents. The RICS report for May is newly published and provides an insight from members across the country. It is interesting to note that new buyer enquiries remain steady, but indicators on sales, prices and new instructions remain slightly negative. The picture is reasonably stable. Agents in my patch (the north west) returned the strongest sales expectations for the coming year.
There are some commentators (and perhaps many would be buyers) who are predicting imminent free fall of house prices, but they have been for years. Supply continues to remain restricted so in many cases only those who have to move are moving. Lack of supply is a barrier to buyers, with many choosing to stay put simply because there is a lack of choice. Even if a buyer finds a house they are reasonable happy with, most prefer to have a number of options to consider.
Whilst the country is experiencing strong employment levels and low interest rates, it is unlikely that we will see any number of repossessions coming to the market or any price correction.
Nobody is mentioning the “B” word, simply because it doesn’t seem to be having any effect on prices.
I just thought I would share my thought process as valuers are often portrayed as being negative, especially when working on reports for banks. I regard myself as an optimistic realist!
Always pleased to discuss valuation issues.