House valuations ‘hit by 10pc fall’
Some bank valuations are lower than agreed sale prices due to Covid-19
Samantha McCaughren Business Editor
BANK valuers have been putting valuations on some properties that are lower than agreed sale prices in recent days, according to mortgage brokers.
Typically, these valuations are around 10pc lower than prices which have already been agreed by buyers and vendors. Brokers are dubbing the gap in valuations the ‘Covid caveat’.
“There are instances we have seen where people have agreed a price and then the bank’s valuer has gone out in the past week or 10 days where they can get access — because they can still get access to some properties — but the valuations are coming in at less than what the agreed purchase prices were,” said Michael Dowling of Dowling Financial. “So that is going to cause a problem.
“People who agreed say a month ago, the valuer is saying: ‘I am under instruction from the banks to, in a sense, put a Covid caveat on the valuation’ and it seems they are taking about 10pc off current agreed prices to give themselves a cushion.”
A report from Davy on Friday said residential transactions were “starting to collapse”.
It said the Property Price Register update last week added only another 700 transactions, around 40pc lower than the weekly average transactions through January and February.
“In this context, transactions could fall to a negligible level, perhaps preventing the CSO from publishing a reading for house price inflation in April,” it said.
When asked by the Sunday Independent about house valuations during the mortgage process, a spokesman for AIB said: “We continue to monitor the housing market closely, but it is too early to comment on any aspects of it.”
Meanwhile, Bank of Ireland said: “We’re seeing no evidence of this through our channels.”
On Friday, Ulster Bank introduced a new condition requiring valuations to be done prior to drawdown of the mortgage cheque rather than earlier in the process, at loan offer stage.
The bank said this was an “enhancement” for customers as getting valuations done was difficult at present.
Pat Davitt of the Institute of Professional Auctioneers and Valuers said he was aware of banks asking valuers about the impact of Covid-19 on valuations.
However, he said valuations should only be changed when there is “comparable evidence” of price falls in the marketplace.
As previously reported, banks have introduced a range of additional requirements for mortgage borrowers due to the pandemic’s impact on jobs and incomes.