Why is the EdgeProp valuation lower than bank valuations

EdgeProp’s valuation can sometimes be lower than bank valuations because EdgeProp uses automated analytical models to estimate property value based on recent transacted prices and multiple public market variables. This approach tends to prioritise up-to-date market data and removes potential outlier or speculative pricing that may be present in some bank-assigned valuations.

Banks, on the other hand, often use in-house valuation teams and may apply different methodologies, including comparable sales, replacement cost, or even discretionary adjustments based on the bank's risk appetite, lending strategies, and internal policies. As a result, bank valuations can sometimes reflect a more optimistic or conservative assessment depending on lending market conditions.

The EdgeProp valuation is therefore typically market-driven and systematic, while bank valuations may include additional assumptions or risk buffers. This difference in methodology can lead to EdgeProp showing a lower valuation compared to some banks, especially in fluctuating or rapidly changing market conditions. Both methods provide useful reference points, but are calculated independently with different risk, market, and policy considerations in mind.