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Mr 0.01%

The Media...becomes Self Aware?

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An interesting article from the Guardian.

Don't quite know how to sum this up. Possibly the biggest rally amongst VI's to shut the media up about house price falls?


Falling house prices? Blame the media

from Guardian Money by Patrick Collinson

When house prices rise, estate agents and surveyors say it's about demand. When house prices fall they blame the media

House prices are falling for the first time since last July, according to the Royal Institution of Chartered Surveyors (Rics). The reason? Maybe it's excess supply coming on to the market; maybe it's the lack of mortgage finance; or maybe it's fear of job losses in the public sector. Or maybe it's my fault.

Yes, that's right. I work for "the media" so therefore I am personally responsible for the level and direction of house prices.

Here are a selection of surveyor comments, from Glamorgan to London via Yorkshire and Gloucestershire, in response to the latest Rics survey:

"Media hype is definitely affecting potential purchasers' expectations regarding prices falling over the next few years, with lower offers being made as a result"

"I worry that press comment may depress confidence"

"Providing the media does not get negative, there is no reason for a dip. Bricks and mortar are attractive investments as always"

"Doom and gloom in the media is resulting in low valuations. A bit of positive talk and the market would pick up"

It goes on and on. Firms in Colchester, Worcestershire and Walsall comment:

"Media prediction of 20%-40% housing slump is not helpful"

"Media commentary is affecting buyers' confidence"

"We have noticed over the last 2/3 weeks that the market appears to be quieter. This may well be ... a result of the continual media speculation"

Perhaps a firm in Slough sums up the mood of many surveyors when it writes:

"If the property market is left to its own devices, it will gently rise over the next 12 months. If the media scare the public with headlines, this will become a self-fulfilling prophecy"

What appears to unite all the above commentators is the belief that house prices can never fall. They must rise for ever and ever. Only a few wicked people in the press knock the market off its one and only true path.

These are the people who embraced every daft TV programme which, over the past decade, told buyers to binge-borrow and buy whatever they could. They convinced themselves the market was an unstoppable force, and for years they were right.

But this unstoppable force has now met an immovable object. It's called the banks. They are no longer lending money willy-nilly to anybody knocking on their doors. They want huge deposits, and they will now even check whether you might have the resources to repay the mortgage. How extraordinary.

The conclusion to be reached after 10 years of madcap lending is that house prices are not a function of demand, but are simply a function of how much money the lenders are willing to advance. Almost everything else is immaterial.

With few signs that the banks are loosening the purse strings it is difficult to imagine how prices can advance much further. And "a bit of positive talk" will make not one jot of difference.

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  • 399 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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