Banks and Valuers need to be held accountable

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Australia needs to increase property development and construction and it should address finance issues immediately, and in particular valuation methods.

 

Banks are obviously being very cautious post-GFC and are looking to minimise their risk, but the valuation practices are so conservative, unbalanced, and irregular, that they are restricting growth and investment opportunities.

 

Valuation processes need to be scrutinised and should reflect how the open market assesses opportunities.   While banks don't have an official stance on profit and risk (P&R), their influence on valuer’s has them adopting a P&R factor of at least 16% apparently? And that’s assuming 100% debt with a ''one-size-fits-all'' approach to development and risk assessment.  In the real world of 60% debt funding really equates to a minimum 20% profit on cost.

 

Some properties are being valued for less than the construction costs and buyers who are trying to use the equity in their own homes are not much better off in many cases with valuer’s driving a nail into the economies coffin, and obviously under the banks instruction!

 

Something needs to be done quick smart so the property sector can progress, and the banks and the valuer’s need to be held accountable for the undeniable stagnation in far too many areas.