Clearly COVID-19 has presented challenges to those involved in the property market and particularly to those providing valuation advice, with some of those challenges more obvious than others. Indeed, we consider that Covid-19 will and already has impacted on different sectors in a variety of distinctive ways.
There is no doubt that we have been operating in a period of increased uncertainty since March 2020. The ongoing government-imposed restrictions, both regional and national (aka lockdowns one and two) have created a unique set of circumstances in which property professionals are still expected to make a judgement regarding the value of an asset. At Sanderson Weatherall, like many other firms, we started accompanying our reports with a declaration of material uncertainty at the onset of the pandemic.
The biggest driver for lenders, especially in the property market, is certainty and uncertainty. A lender wants to confidently predict what will happen and will use property valuers to help minimise risk.
Property professionals should, as always, be alert to micro and macroeconomic influences on value. A property valuation requires local knowledge of the individual market sector where that property is located, as well as an acknowledgement that such markets will be influenced by national, regional and local economic activity.
What are the biggest external influences on property valuations right now?
There are a number of factors currently in play which are influencing levels of certainty, or, dependent upon your outlook, uncertainty, right now. These are:
The pandemic caused great uncertainty. It’s unfamiliar territory and a rapidly changing situation. That said, the financial markets have mostly recovered after the initial downturn.
A highly anticipated election, subsequent claims of voter fraud and concerns over political unrest brings about instability which impacts on the UK, due to our economy being intrinsically linked to the USA.
Brexit is still impacting the economy and especially exchange rates, though this is more about uncertainty for next year rather than the deal or no deal outcome.
Job losses have already materialised this year as restrictions impacted on all sectors, and especially forced many retail and leisure operators to close. The government have been heavily supporting job retention so it’s likely we won’t feel the full extent of unemployment until the furlough scheme ends, which is now scheduled to happen in March 2021.
We know that this will become a problem post Covid-19, to what extent and for how long remains unclear.
It is impossible for anyone to determine the outcome on how these factors will play out and the impact they will have on property values. The job for valuers at the moment is to weigh up all the external influences, make a judgement with the facts they have to hand, and advise lenders accordingly. At Sanderson Weatherall it’s encouraging that we’ve remained busy throughout, actively dealing with a wide range of lenders whose confidence in the market provides a positive outlook moving forward.