Non-story of the week

From the BBC, who, being a state-controlled broadcaster, are keen to peddle the myth that "Rising house prices are A Good Thing":

Property sales and remortgage deals are collapsing because some mortgage lenders and surveyors are deliberately undervaluing homes, estate agents say.

Properties are typically being undervalued by at least 10%, said the National Association of Estate Agents. It said surveyors afraid of being sued by lenders were being overcautious.

But the Royal Institution of Chartered Surveyors denied the claim, saying the housing market was constantly changing and had lots of "imperfections".

It was a free world last time I looked, and if a bank thinks that a property is worth 10% less than what somebody is prepared to pay, then that person is free to go to a different bank or to take out a mortgage with a higher loan-to-value ratio and pay a correspondingly higher interest rate (of 16% or more) on the 'top slice' of the borrowing.

The true value of a house is only a derived figure anyway, it's whatever the buyer has saved as a deposit plus whatever he can borrow from the bank. If the bank reduces the amount that it is prepared to lend, then by definition, house prices will come down to the appropriate level.