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Report on Comparable Evidence in Property Valuation

July 3, 2020

PRICING TO MARKET: an investigation into the use of comparable evidence in property valuation by Professor Nick French.

Statement of the Chairman of TEGoVA

For some time the comparative approach of valuation has been the subject of intense debate within TEGoVA between those of its association members which consider that the method may only rely on the evidence of actual sale prices and others who also place reliance on asking prices and other market information in those markets where sales price information is not easily available or unreliable.

European Valuation Standards (EVS 2016) state that "The comparative method assesses market value through an analysis of prices obtained from sales or lettings of properties similar to the subject property and the adjustment of the unit values to take account of differences between the comparable properties and the subject property."

Following a wide ranging debate at TEGoVA's General Assembly in Sofia last October, the TEGoVA Board commissioned a report on the subject from Professor Nick French, the much respected academic and top Authority on valuation. His report shows that in Europe there are serious divergences in market transparency, not a difference in 'valuation culture'. Instead, the research shows a strong correlation between the degree of resort to other intelligence than sales comparables and the degree of property market opacity. For Professor French, this has consequences ...

"This implies that international valuation standards should not be over-prescriptive in codifying the appropriate use of comparable evidence as each data source could play a lesser or greater role depending upon the transparency of the country in question."

Professor French's Report highlights the real conditions under which valuers in many countries have to work. It is likely that in the light of this ground-breaking report the soon to be published European Valuation Standards 2020 will be amended to reflect the Report's recommendations.

Krzysztof Grzesik REV FRICS

Nick French

Professor Nick French

Nick French is a recognised expert in Property Valuation & Investment and has served on various Valuation Standards committees at both the RICS and IVSC. During his career, he has worked as a professor at various Universities in the UK, Europe and the USA. Nick is also the Editor of the Journal of Property Investment & Finance, the award winning academic international journal of the real estate industry. He also writes regularly for many other professional and academic journals.