Price Rises Pose Shortfall Problem
The rapid rise of house prices is outstripping market valuations leaving prospective home buyers facing a mortgage shortfall, according to a report.
And, it’s not only in the overheated London market where valuations are failing to keep pace with price hikes.
According to some estimates, house prices have risen over 7% in recent months outside of London and twice that in the capital.
This has resulted in down valuations’ says The Telegraph, with surveyors’ valuations coming in below agreed prices.
Clearly, this poses problems for the house purchaser as lenders base their mortgage arrangements on such valuations.
Purchasers with big deposits and cash buyers may be able to withstand such variance but others face sizeable shortfalls and potentially losing out on their prospective purchase if unable to secure loans at a higher LTV.
Peter Bolton King, residential director at the Royal Institution of Chartered Surveyors, told The Telegraph that such problems come with a rising market, as surveyors base valuations on comparable evidence such as recent sales of similar houses in the area
If property prices rise quickly, comparable evidence never catches up, he said.