To say that the mortgage market has been volatile in recent months is an understatement.
Even at the time of writing, news broke of yet more deals being pulled from the market. As a result of this turbulence and a stream of interest rate rises, there is currently capacity in the surveying market; and where there is capacity, there-in lies the opportunity.
Keeping the market moving
The market is clearly in a state of flux. It has become difficult to predict when lending, and therefore valuation volumes will return to more typical levels.
However, there are some elements we can control for the industry’s benefit. The property sector is highly cyclical and those of us who remember past slowdowns will recall that the market always eventually returns. In fact, just 10 years ago, following the 2007-9 economic crisis, we found ourselves with a shortage of surveyors and a back-up of caseloads.
Experience tells us that when the market does return then we should ensure we are ready for the upswing.
The valuation industry has evolved in the past 10 years with the adoption of data powered risk assessment tools enabling the increase of less time-consuming valuation methods such as desktop and assisted automated valuation models (AVMs). These methods will be critical in maintaining speed and quality when volumes bounce back.
At Landmark Information Group, our cross-business activity data paints a stark picture of the home-moving process in England and Wales – the average time from instruction to completion is now taking 80% longer than in 2007, with the transaction process fraught with complications, delays, disconnects and uncertainty.
Just three years ago, the average time from instruction to completion was 104 days; by 2022, this had increased to 133 days. This fact is even more striking when we consider the same process was taking 81 days in 2007.
Valuations and mortgage approval times play a crucial role in keeping the transaction pipeline flowing. But we know that it can take time for the sector to adjust to a sharp increase in case volumes. We saw this in the spike of activity after covid lockdowns. In the first six months of 2021, the average purchase case turnaround time was 30% longer than the first six months of 2019.
While in-person, physical valuations have a clear place in this evolving environment, when demand begins to return, the importance of good data enabling faster and accurate valuations and so getting the market moving more quickly again will be very evident.
Digital versus in-person valuations
One clear advantage of digital valuations is improved efficiency. Where a physical valuation is required, rich data can drive efficiencies by making sure that potential issues, that might otherwise be missed by walking around a property, are captured at as early a stage as possible.
For instance, factors such as lease length is one of the most common issues that come up in post-valuation queries yet can’t be seen on a physical inspection. This is why combining a physical inspection with as rich a dataset as possible means confident decisions are made with all information necessary to minimise the chances of post-valuation queries.
This matters because post-valuation queries introduce additional effort and costs for the lender, the panel manager and the surveying firm, minimising them as much as possible is one of the best ways to drive efficiencies and growth for businesses across the transaction chain.
Similarly, valuations which might be categorised as having a borderline need for a physical inspection suddenly become doable with the same degree of accuracy via desktop valuations. Instead of surveyors trailing from house to house, often losing time sitting in traffic, they are able to make accurate decisions from their desktop.
Whilst the data available in the market is not the same as the insight that can be seen by visiting a property, it can be more insightful with regard to future risk. For example, flood or climate change risk can’t be spotted with the naked eye, but models exist which can predict the likelihood of these impacting the property which might be valuable to a mortgage customer.
Of course, that’s not to underestimate the importance of in-person, human valuations. A surveyor that knows the local market well is worth its weight in gold. Surveying is just as much an art as it is a science, and this human touch, combined with local knowledge is invaluable.
With this in mind it’s easy to see how, when deep human expertise meets rich data insights, there is a winning combination for those looking to provide an accurate survey, first time. The efficiency that good early data can bring is by ensuring that the right areas of expertise are used at the right time for the right property.
When thinking about the myriad of concerns, queries and complications that span the UK market, this approach pays back in numerous common and rare examples, giving wide reaching benefit to the transaction mix.
Greater use of data at this critical stage in the home-buying process will undoubtedly help improve efficiencies across the whole property buying journey. Surveyors and lenders must play their part in this cross-industry efficiency drive – adopting data and tech-enabled solutions which help everyone.
Surveyors play an important part in shaping our world and we must encourage and support this highly skilled, professional workforce at all costs. As transactions begin to improve, the most efficient and forward-thinking players, able to make the most of the data at their disposal, will undoubtedly come out on top.
Mike Holden is divisional director at Landmark Information Group
