Following the leave result in the UK Referendum on the European Union, important questions have been raised about how Surveyors should approach residential property valuations in a period of potential market uncertainty over the coming months and possibly up to the final UK exit from the EU.
In the immediate short to medium term, there is understandable market and political uncertainty whilst all sectors of the UK come to terms with the implications of this significant event. The property and financial markets are likely to be an early and high profile barometer of sentiment.
As we see it, the UK will remain a member of the EU until such time as an exit formally occurs. In this respect, we feel that our surveyors should remain calm, rational and professional in their approach to property valuation conscious of the fact that there is a long process to endure before the UK leaves the EU officially.
It has been well publicised that the UK lending institutions are much better capitalised than they were in 2008, and have stress contingencies in place to deal with market shocks such as this and it is widely felt that there is unlikely therefore to be a financial meltdown similar to the banking crash of 2008. Indeed, after the initial shock, the financial markets recovered in the first week although there was still market volatility.
It is likely that the UK economy itself may experience periodic volatility in the second half of 2016 and this may translate into a slow-down in property market activity and house price growth whilst buyers ‘wait and see’ (especially in London). However, there is not, at the moment, any indication of widespread house price reductions in our area of operation although we are conscious of the fact that there may be fewer property transactions over the coming months.
The guidance from lenders and the Royal Institution of Chartered Surveyors is for Valuers to continue to follow, and not to suddenly deviate from, well-established best (valuation) practice.
As a company we continue to advise our professional staff to reflect the market, not attempt to lead it and to continue to use the best available comparable evidence. Also, at times like this it is more important than ever that we continue to maintain good links with all our local estate agent colleagues in order to enable us to compile up-to-date evidence of sales in progress and any other market intelligence.
The residential property market is, however, complex and there may be certain sectors that will be affected in different ways. As a practice that is fortunate enough to work for a wide cross section of both private and corporate clients, and over a range of property types, it is vital that our expertise should be alive to these variations, understand them and consider their impact when providing an opinion of Market Value.