Queensland developers say overly conservative valuers to blame for sales failures
Suggestions by Mortgage Choice CEO Michael Russell that overly conservative property valuers are hampering the recovery of the property market have been affirmed by residential property developers in Queensland, who say valuers are to blame for one in two sales contracts to falling over.
Property developers claim that in some cases valuations are coming in 15% to 30% below the contracted sales prices, with Des Ryan from Demac Homes telling the Australian Financial Review the sale of a three-bedroom duplex for $340,000 fell through after the valuation came through at $280,000.
Ryan says the accuracy of valuations needs to be questioned, labelling valuers “a cancer in the building industry”.
“I have had one valuer in here boast that he has had to value the same property seven times before it finally got sold.”
Another developer, David Horder from Gorman Property, told a similar story, with a $175,000 land sale near Ipswich falling over after the bank-instructed valuer said it was only worth $130,000.
Horder believes valuers are lowering their valuations under pressure from the banks, which are facing tougher capital restrictions.
However, the banks have dismissed the suggestion, with Westpac senior product risk manager Matthew Miller telling the AFR valuers were under no pressure to report more conservative valuations.
Propell National Valuers chief executive Bart Mead says in addition to “highly publicised market trends, competitive property sales and demand levels”, factors such as property presentation, renovations and location have had a major impact on values in 2011.
Mead says owners must consider not only the capacity for a property to expand, extend or renovate, but also its capacity to be demolished and replaced.
“Renovations and extensions need to be sympathetic to the rest of the property, and building permission and certificates should be sighted, as amateur work can often detract,” he says.
According to Mead, particular location issues also affect valuations, even if the property itself is comparable to others in the suburb.
“T-junctions, bus stops, cul-de-sacs, views, hills and access to the city can all detract or add value to a property,” he says.