Down-valuations continue to fall as economy recovers

The proportion of homes down-valued by surveyors continued to fall across the entire UK in the third quarter, according to research from e.surv.

The 'overestimate index', seen exclusively by Mortgage Strategy, shows 23.7% of properties in England and Wales were down-valued in Q3 compared with 25% in the second quarter and 26% in Q3 2012.

In Scotland, the proportion of houses down-valued fell from 30% in Q2 to 28.3% in Q3. The figure is up slightly from 27% in Q3 2012. In Northern Ireland, 45.3% of properties were down-valued in Q3, down from 48% in Q2 and 47% in Q3 2012.

The data accounts for about 60% of purchase, remortgage and buy-to-let residential transactions, tracking values carried out by e.surv and firms that it panels work out to on behalf of lenders. E.surv director Richard Sexton says: "The positive movements reflect the fact that there is an economic recovery underway.

The availability of higher LTV products means people do not need to push prices up by as much - people can now be more realistic with the estimates they provide and therefore we've seen the drop in down-valuations. However, the differences between Northern Ireland, Wales, Scotland and England are a telling sign about the differing speed of the recovery in those economies."

UK house prices have also risen to a record level, according to the Office for National Statistics (ONS). In August, the ONS's house price index stood at 185.8, surpassing its previous peak of 185.5 in January, 2008.

The average price of a house or flat in the UK is now £247,000, the ONS said, the highest figure since the index was first calculated in 1968.

The figures suggest house prices are rising in England, Wales and Northern Ireland, but still falling in Scotland. Prices across the UK rose by 3.8% in the year to August, 2013, up from 3.3% in July. However, excluding London and the South East - where property values have seen the biggest increases - prices rose by 2.1%.