Almost 400,000 property transactions were downvalued last year, as more mortgage lenders get spooked by rising house prices.
Around 390,285 homes have been downvalued by surveyors working for lenders, according to data from estate agents Benham & Reeves.
The estate agent says the average downvalued property saw a price drop of between £5,000 and £10,000 last year.
An average drop of £7,500 means the average UK downvalued UK house fell in price by 2.8%.
Benham & Reeves said the South East had the most downvaluations, with 60,327 for 137,107 homes sold in total in the last 12 months.
The estate agents added that 47,769 of the 80,965 homes sold in London in the last year were subject to a downvaluation.
The North West was also badly affected, with 54,043 of the 96,506 homes sold in the period being downvalued.
Half of all transactions in Northern Ireland were downvalued. But, because a lower level of homes were sold in the region, its total of 12,346 downvalued transactions was the lowest in volume of all areas in the UK.
Benham & Reeves director Marc von Grundherr says: “Down valuations can be a real thorn in the side of those eager to progress with a property transaction but unfortunately they are a prevalent occurrence within the UK property market.
“They often occur due to over expectant sellers setting their asking price too high but we’re also seeing more lenders request a greater degree of caution by valuers in a market where prices are climbing at a rate of knots."
UK house prices rose by 7.6% in July, according to the latest figures from mortgage lender Halifax.
The average house is worth £261,221.
What is downvaluing?
This is where a surveyor acting for a mortgage lender judges a property and says it's worth less than the price originally agreed by the seller and buyer.
This sounds like good news for the buyer and bad news for the seller.
But generally it's bad for both, as the buyer's mortgage lender might not be prepared to lend them enough cash to buy.
The buyer then has to find a way of making up the shortfall, and the deal could even fall through.
Downvaluing can happen for several reasons.
But when there is a big trend of it, it's usually because mortgage lenders have become cautious of rising house prices and tell their surveyors to be more critical.
These lenders tend to get nervous after a period of rapid house price increases, which happened during the pandemic, as they feel any lending they do becomes extra risky.
What to do if you're selling a house that is downvalued
One option is to look for a new buyer with a different mortgage lender, and hope all involved agree on the value of your property.
Another idea is to not sell until lenders stop downvaluing, or to simply give in and accept the lower value.
A third option is to try to negotiate with the lender and show evidence why your house should be worth more, but this rarely works in practice.
