CEO of UDIA Queensland, Brian Stewart, discusses valuation of new residential dwellings in Queensland for lending purposes in an in depth report of the same name. A wide range of findings were discussed and recommendations were made on how to address the most pressing issues. Here is a summary of the report written by Brian, as well as links to see the full discussion papers.
Whenever two or three industry reps get together these days it takes about 5 minutes for the conversation to turn to the vexed question of valuation of new dwellings for the purposes of obtaining finance. So what are people saying?
• Real estate agents and developers blame the valuers;
• valuers turn ostrich and say that they are simply providing a valuation for a client based on the parameters of the request from the financier, or that the fees paid by Valex for such valuations are at such a low level that valuations are uneconomic to perform in a comprehensive manner;
• the financiers’ answer is that there are requirements from the mortgage insurers that are imposed on borrowers;
• the mortgage insurers no doubt assert that they are accountable to their shareholders and need to manage risk and that is harder to do in a falling or steady market than it is in a rising market.
In the latter part of last year and the earlier part of this year UDIA (Qld) undertook research funded by sponsorship from SSKB to ascertain what we believed to be the facts and to identify some solutions to the problem.
Contemporaneously the PCA, HIA and MBA started raising this issue on behalf of builders, investors developers and others. A joint working party was established and a multi-party meeting held with representatives of the Australian Bankers Association (ABA) and the Australian Property Institute (API). It was hoped that this meeting would assist in resolving some of the issues and to ascertain more of the facts. And that is what it did to a degree. Further meetings will be held in the future and it is to be hoped that these will resolve some of the difficulties that have yet to be addressed.
So what is the situation, as I see it, and what needs to be done to address it?