Date posted: 9/11/2020 4 min read

Three key trends from the valuation practice survey

The first CA ANZ Valuation Practice Survey asked members for their views on the key trends affecting valuations. Here are three insights it revealed.

In brief

  • More than half of the survey respondents expect the share market to decline over the next financial year
  • The survey shows the AASB 16 leasing standard is providing challenges for company valuations
  • It shows that most respondents expect impairment challenges to increase

The events of 2020 have had a significant impact on valuation specialists. 

COVID-19 has affected businesses in different industries in different ways, requiring a flexible and customised approach to valuations that is also rigorous and supportable.

The first Chartered Accountants Australia and New Zealand Valuation Practice Survey asked members for their views on valuation levels, market impacts and impairment predictions.

We also asked about the importance of factors such as the new AASB 16 leasing standard, control premiums and ESG on valuation outcomes. 

One surprising outcome from the survey was the relatively strong level of correlation across valuers’ opinions. This indicates that most valuation professionals in our region are approaching the valuation challenges of the year with a similar framework and set of assumptions. 

Most respondents (55%) expect the share market to decline over the next financial year.

For our clients, this is great news as it offers confidence in the valuations they receive. It’s also good for the credibility and reputation of the valuations profession. 

We hope this survey will be the first in an annual series – providing an expert view of sentiment and a point of reference in the valuations sector for many years to come.

Here are three insights from the survey:

1. Share market declines tipped to continue

The impact of COVID-19 weighed heavily on survey responses, with most taking a subdued view of the year ahead. Most respondents (55%) expect the share market to decline over the next financial year, with listed equities considered to be fully valued. Two-thirds of respondents also predicted property prices will decline, while bonds, agriculture and resources values were considered ‘about right’. Read more

2. AASB Leasing Standard to provide ongoing challenges

The survey revealed that the AASB 16 Leasing Standard is continuing to provide challenges for company valuations. Despite the standard being mandatory since 1 January 2020, only 39% had made adjustments for it in their valuations. While there may be good reasons for this, it’s clear that it’s an area to watch in next year. Read more

3. Impairment impacts set to increase

The report shows most respondents expect impairment challenges will increase. Retail businesses were considered by many to face the highest impairment rates as the COVID-19 pandemic and related shutdowns decimated foot traffic for bricks and mortar stores, while high unemployment and a focus on household saving kept purse strings tight. Read more

2020 Valuation Practice Survey

Download Survey

About the survey

The 2020 Valuation Practice Survey was conducted in August 2020. It includes results from more than 100 respondents working in valuation-related disciplines across the public and corporate sectors. The survey was conducted by Chartered Accountants Australia and New Zealand and distributed online to Business Valuation Specialists.

Stay up to date with the latest in business valuation

The CA ANZ Business Valuation Community Newsletter is your go-to resource for the latest information on topical news items, technical updates and upcoming CPD events, including qualify as a CA Business Valuation Specialist.

Subscribe here

Search related topics