Panorama: Bursting the house price bubble

Last night's Panorama, Bursting the house price bubble, had an interesting take on rogue valuations supplied to the Land Registry.

You can watch it here (for the next six days):
http://www.bbc.co.uk/programmes/b008xztb

It investigates people who have lost up to 60% on property investments, a Serious Fraud Office investigation and gives a damning view of Simon Morris and buy-to-let firm Morris Properties Group and solicitors Watson & Brown. Morris is said to be worth £69m and has even made the Sunday Times Richlist...
http://www.timesonline.co.uk/richlist/person/0,,48327,00.html

Fascinating stuff. One observation: I was surprised the programme was hooked on a warning from the Council of Mortgage Lenders that housebuilders are sometimes distorting true house prices with discounts. However, it fails to pick up on the fact lenders must be commissioning surveyors who are failing to pick up on these inflated selling prices.

Here's a summary of the programme...

http://news.bbc.co.uk/1/hi/programmes/panorama/7227310.stm

Any further thoughts? (Post comments below - URL not required)

- Andrew Oxlade, Editor, thisismoney.co.uk

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Comments

[Seamus McCauley]

"However, it fails to pick up on the fact lenders must be commissioning surveyors who are failing to pick up on these inflated selling prices."

My experience of surveyors is not that they independently assess the price of a house but blindly sign off the price stated by the estate agent.

I discovered this last time I moved house, about 18 months ago, when the valuation in my survey was exactly £10k lower than the price I'd agreed to pay for the property. I raised this discrepancy with the seller's agent, pointing out that if my surveyor thought the house was worth £10k less than we'd agreed we'd need to renegotiate. The estate agent found it so unlikely that a surveyor would come up with his own valuation in this way that he immediately and unhesitatingly expressed the view that it was simply a typo.

And of course it turned out it was a typo - when I called to check the valuation with my surveyor and pointed out that his price differed from the estate agent's he immediately said that this didn't sound like it could be right, and a quick check confirmed that it was indeed just a typo.

We might think we're paying surveyors to check whether the house we want to buy is really worth it, but the one time this appeared to have happened no-one involved (except me) was in any doubt that it must have been an error.

[Greg]

A better link to watch the Panorama program is here

http://www.bbc.co.uk/iplayer/page/item/b008xztb.shtml?filter=txdate%3A07-02&filter=txslot%3Aevening&scope=iplayerlast7days&start=3&version_pid=b008xzs6

Since you can blow it up to full screen.

[Karl]

For anyone interested in bubble economics see http://harpers.org/archive/2008/02/0081908.
This is from a popular American website but applicable globally. Truly compelling reading.