top of page
  • Writer's pictureCreevey Horrell Lawyers


Updated: Oct 11, 2022

We have seen an extremely unusual market in this last financial year with the property market having surged to new heights only to be faced now with higher interest rates and increased cost of living.

Domain recorded in its Media Release for the end of 2021 that the annual rate of house price growth this last year was at 21.9%, with regional Australia recording an above decade average increase of sales of 42%[1], but now that is starting to change with the median house price growth rate now reducing to 0.6%[2].

This last year has been a roller coaster for both buyers and sellers, although still a Seller’s market things are changing, but one thing continues to be misunderstood, the difference between market appraisals and bank valuations.

In this seller’s market, buyers have been struggling to obtain finance, believing the market value of the property to be relatively one and same as what the banks will value it at. Meanwhile sellers have entered into contracts subject to finance, only for the contracts to fall over because the buyer’s bank’s valuation is remarkably lower.

Market valuations are based on comparable sales, current sales, and enquiries in which a Real Estate professional will determine the market value of the property, but it is not the market value of the property that a buyer’s lender will go off.

Banks will use a professional valuer who will consider not only the market, but also other factors such as the state of the property, its location and the average value of the property in the previous years. The Bank’s valuation is a more detailed and comprehensive value of the property, not just subject to the market, which is why a bank’s valuation is often lower than the market valuation[3].

Additionally, professional valuers rely on data sources for their valuations, however Sunrise Financial has advised recently that professional valuers are no longer relying on “desk” valuations and now physically inspect each property[4]. This covers off on physical issues with the property, that are not ordinarily a concern in a “hot” market but will become a concern when the market cools down of which we are seeing the first signs of.

This has caused a number of problems for our purchasing clients, who discover during the course of their transaction that they cannot obtain finance.

Now more than ever it is important to ensure that when drafting contracts that they be conditional on finance (unless the buyer has the cash readily available). To avoid the unnecessary termination of contract, it is recommended for buyer’s to first seek a finance broker’s assistance in identifying their borrowing power before entering into contracts.





[4] Samantha Peck at Sunrise Financial Brokers interview dated 18.12.2021.


bottom of page