Buyers and sellers must negotiate lower valuations averaging £8,000 “as the UK property market begins to cool”, according to HBB Solutions.
The average UK property price is currently £286,397 but property sales are seeing valuations fall by 2.8%, says the chain repair property buyer.
He adds: “This means there is a gap of £7,978 between the amount a lender is willing to lend and the seller’s price expectations.”
The company states in this case that “the seller has no choice but to lower his asking price by almost £8,000. If he does not want to do this, the buyer has no choice but to increase his deposit by the same amount.
He points out that since the average buyer places a 25% down payment worth £71,599, an increase of £7,978 pushes the required deposit pot up to 27% of the property’s value.
The biggest downward valuation adjustments in today’s market are in the East Midlands, where a 3.3% reduction results in a price gap of £8,109 between buyer and seller.
In the East of England, this gap amounts to £8,090, with an average valuation downside of 2.3%.
Scotland is home to the second largest downside valuation adjustment at 4.3%, meaning buyers and sellers need to renegotiate £8,089, buyers and sellers in Wales (8,056 £) and South West (£8,011) also having to readjust a previously closed deal over £8,000 following a lower valuation.
The company adds that downside assessments are lowest in the North East, but even then buyers and sellers still have to negotiate a £7,638 difference between the agreed price and the value of a property being downgraded.
HBB Solutions Managing Director Chris Hodgkinson said: ‘Down valuations are the worst case scenario for buyers and sellers who have already danced the dance to agree a selling price on a property. Unfortunately, they can be a common occurrence and one that will only increase as the market enters a period of heightened instability.
“What we’re seeing right now is that the market is starting to slow down from a house price appreciation perspective. What we don’t see is recognition of these changing market conditions by home sellers across the country, who remain committed to getting the highest possible price for their homes.
“At the same time, low inventory levels mean many buyers are still encountering them at this inflated price in order to secure a home and before the cost of a mortgage climbs further.
“However, following a series of interest rates, many mortgage lenders are now starting to get cold feet and cut their lending rates in anticipation of events to come. The result is that a far greater number of homes are priced down and by quite a margin, leaving sellers and homebuyers to go back to the drawing board in order to get a finalized offer.
“To do this, the buyer must either increase their mortgage deposit and quickly, a task that many struggle to do after already saving for years to enter the market in the first place. Or the seller must accept the lower price. from his house, which again many are unwilling to do.