Private banks’ new openness to AVMs could help stem housing market decline
Private banks, which were once opposed to accepting remote and desktop valuations, began changing their approach over the past week, according to Knight Frank.
For many private lenders, in-person valuations in which a surveyor visits a customer’s home were considered essential before granting loans to buy or remortgage properties.
Desktop and remote valuations were largely the domain of the high street lenders.
However restrictions on movement rendered in-person valuations almost impossible leaving some private banks to pull back from granting loans to purchase altogether.
But, Knight Frank has said that is already beginning to change as the larger private banks begin coming to terms with the prevailing conditions by accepting remote and desktop valuations.
Alex Ogario, head of the private office at Knight Frank Finance, said: “Two weeks ago there was a lot of confusion and adjustment happening, with people firefighting trying to work out what they were supposed to be doing.
“Now banks that weren’t going to accept desktop valuations are coming to the realisation they will need to.
“The big lenders with the big balance sheets tend to be on board, and that’s good for the market because transactions can continue to a certain extent.”
As a result of the pandemic, Knight Frank Research forecasts London house prices will decline 2% in 2020 before rebounding to 6% growth in 2021.
It added that the evolving approach from the private lenders is likely to ease declines in activity in higher value markets like London.
Katie Parsonson, head of Knight Frank’s London Valuation and Advisory team, added: “We’ve been positively reassured by the number of fee quote requests, from lenders for desktop valuations across the core and super prime market in London.
“These have ranged from £1m homes through to single home developments of £20m to £30m.”