Article written by Paul-Roux de Kock, Chief Analytics Officer at Lightstone.

Artificial Intelligence (AI) is reshaping industries worldwide and property valuations are no exception. By leveraging machine learning and big data, AI-driven models promise faster, more accurate and cost-effective property assessments. However, as AI adoption accelerates, so do concerns around trust, transparency and accountability. How do we ensure that AI-driven valuations remain reliable, explainable and free from bias?

Lightstone, pioneered its AI-powered valuation and automated valuation models in 2019 and developed its Artificial Intelligence Valuation Model (AiVM) to deliver increased accuracy, provide broader market coverage to the corporate users of its traditional Automated Valuation Model (AVM) as well as open its usage up to a wider audience. The goal was not to just embrace AI for innovation’s sake, but to produce a widely adopted solution that benefits financial institutions, Estate Agents and consumers alike.

Unlike traditional statistical models, the AiVM processes vast datasets, capturing more nuanced property features to generate more precise valuations across South Africa’s 7.1 million residential properties. While scepticism around AI remains - rightly so, with many of these systems functioning as opaque “black boxes” - Lightstone successfully built an AI powered valuation model that is transparent, independently auditable and most importantly explainable to the humans it empowers.

Why global standards matter

As AI adoption continues to accelerate, aligning with global best practices is essential to maintaining trust. This is especially true for property markets worldwide, which depend on robust, independent valuation models to uphold financial stability and prevent risks like those that led to the 2008 housing market crisis and subsequent global economic recession.

Recognising this need, Lightstone sought membership in the European AVM Alliance (EAA) – a body that upholds the highest standards in Automated Valuation Models (AVMs) and certifying compliance with these standards through the EAA AVM Label. After a rigorous evaluation, Lightstone’s AiVM received the prestigious EAA AVM label, and the company became the first African and only non-European member of the EAA – a milestone that reinforces its global leadership in AI-driven property valuations.

Earning the EAA accreditation meant Lightstone’s AiVM had to meet strict criteria on data integrity, statistical rigour, operational transparency, model stability and trusted confidence metrics. This accreditation guarantees that Lightstone’s AI valuations are not only independent and free from market manipulation, but also explainable, technically robust and can be trusted to consistently perform as promised in the South African market.

The unanimous approval of Lightstone’s AiVM by all members of the EAA’s technical committee represents a significant achievement not only for Lightstone but also for the South African data science community and property sector as a whole. This endorsement demonstrates that the insights products developed by this South African business is on par with the world’s best.

What global accreditation means for the South Africa’s property market

As South Africa’s property market evolves, the need for independent, accurate and trusted valuations is more critical than ever. With banks, Estate Agents and consumers making high-stakes financial decisions, having an internationally recognised independent valuation model ensures trust and stability in the industry as much as the valuation model supporting it.

In this way, Lightstone’s EAA accreditation is more than a badge of honour, it has tangible benefits for the entire property ecosystem. On the consumer front, both buyers and sellers can safely put their trust in valuations that are impartial, data-driven and aligned with global best practices. For Estate Agents, more accurate valuations help set fair market prices, speeding up sales by improving loan approvals and deal success rates.

"Lightstone’s Seller’s Report has become an indispensable tool in my business. Its accuracy, even in unfamiliar areas is remarkable, while consistently aligning with professional valuations. More than that, it gives me the confidence to walk into client meetings, knowing I have credible, bank-aligned data backing me. It’s a powerful asset for setting realistic expectations with sellers and securing mandates. Some may see it as a cost, but I view it as an investment, one that delivers undeniable value," says Marelize Wessels, Marelize Wessels Properties.

When it comes to banks, lending decisions backed by the world-class Lightstone AiVM ensure greater risk mitigation and confidence in mortgaged asset values driving responsible lending business practices, adherence with the Basel capital requirements framework as well as the FSB Principles for Sound Residential Mortgage Underwriting Practices.

“At Nedbank Home Loans, the ability to make swift, informed, and risk-aligned credit decisions is critical to our service promise and strategic competitiveness. Lightstone’s AiVM has become an integral component in delivering on that promise. From a property valuation risk management perspective, the AiVM empowers our teams with real-time, evidence-based insights aligned to market realities, reducing our reliance on manual processes and improving consistency in valuation decisions across the country,” says JP Viljoen, Head of Home Ownership and Solution Innovation at Nedbank.

“The AiVM has significantly enhanced our property valuation turnaround times, enabling us to issue instant, data-driven valuation outcomes with a high degree of reliability and as a result, elevating the client experience in a market where speed and certainty are essential to securing property transactions. This is especially valuable in high-volume environments and for lower-risk, high-confidence transactions where the model’s predictive accuracy enables faster time-to-yes outcomes,” says Viljoen.

An ongoing commitment to high standards and ethical innovation

Lightstone’s commitment to excellence goes beyond securing once off global recognition. As part of its continued membership of the EAA, it regularly submits bulk test reports to get independent confirmation that the model continues to perform to the highest standards under changing market conditions.

Lightstone also provides corporate clients with monthly service level agreement (SLA) dashboards, offering detailed insights into how its AiVM performs across their portfolios and the market as a whole. Additionally, Lightstone’s valuation products are regularly submitted for independent reviews by other leading organizations such as Moody’s and Fitch.

These reviews continue to highlight the financial and customer-experience benefits of using the Lightstone AiVM particularly by reducing reliance on slower and more expensive physical or desktop property valuations. Lightstone prioritises ethical innovation, focusing on the development of unbiased, transparent and explainable AI. Its AiVM incorporates rigorous anomaly detection processes to maintain accuracy and prevent distortions or unfair bias in the valuations it produces. An explainer tool was developed alongside the AiVM which highlights how different property features affects the final prediction.

Our mission is not to build general AI that will replace humans, but to use the exciting advances in the field of AI to develop superhuman efficiency and intelligence for our clients. We encourage the humans using our insights and workflow systems not to just remain relevant, but to use the AI enabled superpowers we provide to effectively defend and grow their businesses in an increasingly disrupted world.

The future of AI property valuations in SA

AI regulation is evolving rapidly, with the European Union leading the charge through initiatives like the EU AI Act. As a member of the EAA’s Regulatory and Public Affairs Workgroup, Lightstone will be actively involved in shaping global AI governance, also ensuring its valuation models and other products pre-emptively align with emerging international regulatory frameworks. Although AI regulation in SA has not gained much traction, Lightstone believes it will evolve in a similar fashion to the Protection of Personal Information Act (POPIA). As more developed countries and regions develop legislation, the expectation is that South African legislators will tap into “best of breed legislations”, as POPIA did with GDPR.

In addition to our involvement with the EAA, we keep our finger on the pulse on ever-evolving AI regulation in other parts of the world to ensure our products are built to adhere to future regulation that might be adopted in South Africa.

With its global EAA accreditation and local focus on developing transparent and explainable AI, Lightstone is uniquely positioned to continue leading and shaping AI-driven property and vehicle valuations in South Africa, setting a new standard for trust, transparency, and technological excellence.

Through responsible innovation, ongoing independent validation, and a commitment to ethical and explainable AI, Lightstone is setting the gold standard for AI-driven asset valuations in South Africa. Not only does this approach support banks, Estate Agents and consumers to make smarter, more informed property decisions, but it helps maintain robust real estate and banking industries, crucial for the growth and stability of the South African economy.