The Property Market And The Media’s Influence

The last few months have been extremely uncertain and worrying for investors because there’s been a lot of banter about housing crashes floating around. I’ll say it straight out, I blame the media. With the media constantly injecting a lot of fear into the mixer with the talk of property prices plummeting, it’s becoming increasingly difficult to remain optimistic about property investments. We’re not even going through a crash right now- that’s the craziest thing about it, because it “sounds” like we are. I bet if you approached 10 random people on the street and asked them about the UK Property Crash, I bet at least 4 of them would say something along the lines of, “Yeah, I heard we’re going through a property crash right now.”

I’m not worried, because I know there isn’t actually anything “solid” to worry about right now, so I plan on investing further into property in 2008. I’ve already discussed why Long Term Investors Shouldn’t Fear A Crash, and I’m still a firm believer in that. A long term investor will find it hard to walk away with negative equity and a big financial hit. It’s odd how the media never mentions the fruits of longterm investment in property.

There is no denying that the rate of house price growth is slowing down and will most likely continue to do so further into 2008, this is the result of a widely anticipated period of stabilisation and a much needed correction, and is not a clear cut indication of a beginning of a “housing market crash”. Property prices aren’t escalating at the same rate as they have been in the past 5 years or so. For the first time in years, prices are starting to drop nationally; people aren’t used to seeing that, so they take it to the extreme and call it a “crash”. Trust me, there is still room for property growth, just not at the same rate we all witnessed in the last few years.

The fact is, the topic of plummeting housing prices captures more interest than growth or correction. That’s why I believe the media has hooked onto the whole non-existent dilemma and made things appear worse than they actually are. Come on, you’re not surprised that the media would actually do anything like that, are you? I think the issue has been totally dragged out of proportion and now the sheep are starting to panic. Prices have barely even shifted; prices have remained stable or slightly decreased over the previous months- nothing major. There were similar slowdowns in 2005 and a lot of people anticipated a crash then- they were wrong. It’s not even a good time to measure right now, because the property market traditionally dries up during the December/January period because of Christmas and New Years. We’ll get a better reflection of the current condition of the market in the coming months.

I know how fickle people can be, so I’m fully aware how people are able to panic before there is even anything to panic about because of media speculation. Consequently, the danger is that people are now beginning to believe such baseless claims, which means we are running the risk of turning into a self-fulfilling prophecy. Now that’s what scares me, the fact that we’re forcing a crash due to our own ignorance.

I’m not saying that there definitely won’t be a property crash in the years to come. I’m just saying that we’re not going through one right now, and that the media makes situations seem worse than they are.

On that note, here’s a quote from arguably the most successful property investor of all time, Warren Buffett:

“Be greedy when others are fearful and be fearful when others are greedy”

Final note, pay no minds to speculation; because speculation is speculation.

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