THE Australian Property Institute has hit back at developers that have this week publicly blamed valuers for sales falling through in Queensland projects.
“Property valuers are highly skilled professionals whose role is to interpret the market, not set the market,” API chief executive officer Amelia Hodge said, following a Fairfax Media article that cited developers accusing valuers of being “instructed by the banks and governed by the mortgage insurers”.
Hodge said that a property valuer who is engaged to undertake a full valuation would attend the property for an inspection and, using their existing data or researched data, provide a valuation.
“In the case of new developments, valuers are required to use re-sales from the subject development or re-sales from outside of the current development as evidence to ensure relevance to the market in which the new development will be part of.
“It is perfectly understandable to hear of purchasers being unhappy when a valuation is cited as the reason why their request for finance is declined. However, the valuer is not to blame when they are interpreting the market they are operating in.
“A valuation is part of the lenders risk management process – processes which mean that valuers, in no small part, have helped to protect the Australian property market from much of the turmoil seen overseas during and since the GFC,” she added.
Hodge said any suggestion that the quality of a valuation is reduced due to the fees charged or that the amount of time spent at the subject property is linked to the quality of the valuation report are simply not correct and reflects a poor understanding of the valuation process.
“What we currently have in some cases is a falling market, with developers of new apartments in those markets under enormous pressure from existing stock and further projects in the pipeline,”
She said banks have become particularly cautious about lending on certain types of property and have further tightened lending criteria depending on location of the property, size of the property, and the financial background of the buyer.
“We have seen lending on apartments tighten over the past 12 months due to the amount of stock currently on the market and the number of apartments continuing to come through the pipeline.”
The media report also quoted an anonymous source that said the average time valuers spent at 58 valuations across two of its projects was just over four and a half minutes.
Hodge said valuation firms have invested heavily in technology to assist valuers in undertaking their role, meaning more data is available to a valuer while they are on-site or on the road.
“A valuer may spend a short amount of time at the subject property when compared to a pest or building inspector, however, the valuation process will largely take place away from the subject property.
“Of course valuers would like to be paid more for the important service they provide but they, like many professionals, are in a challenging and competitive price environment.
“It is very easy for those involved in property transactions to blame the valuer but those who do generally don’t understand the role of the valuer or the importance of their role to the stability of the property markets in Australia.”
Australian Property Journal