15 Myths about Market Value

Market value is one of the most difficult notions in economics. It is also one of the most puzzling in the valuation industry, although its definitions can be found in the International Valuation Standards, European Valuation Standards, RICS standards and national standards. This value tends to be given different interpretations and misconceptions surrounding it are shared by many members of the property valuer community. The many ways in which property market value is understood leads to misvaluations and significant variations between valuation results, which are damaging to the prestige of the property valuation profession. This article explores areas giving rise to the misinterpretations of property market value to provide a critical review of the existing views, and to put forward arguments explaining why they should be revised. To this end, a critical literature review and observations made by the author during discussions with valuation professionals taking skill-improvement courses, scientific conferences on valuation methodology and practice, and entry exams for the profession of property valuers are used. Three main areas conducive to the emergence of myths have been identified: the interpretation of property market value (four myths), the process of arriving at property market value (ten myths) and the interpretation of valuation results (one myth). The myths are challenged on the grounds of the market value concept and its interpretation as used in economics.