How media leads the property market
It seems to be common knowledge that the media partly created the previous property boom through hype and spin, but no-one seems to be pointing out that the reverse is happening now.
Why? because the media is still leading and creating public sentiment.
So lets look at what happened. The papers, through various pundits with a book to sell, newbuild to flog or columnists looking for a platform to boast how clever they are - all helped create a buying hysteria which went too far, the effects of which were compounded by the banks irresponsibility with finance. People felt they had to buy, to trade up, or get on the first rung of the ladder, before it was 'too late'. And so what we have seen is the media partly creating a 'bubble' effect, where house prices had expanding beyond their real worth. Now, we are seeing a natural reaction to that as the market corrects itself.
The bottom line is that all media is biased. They are biased because they rely on ratings, on people picking up their paper and not their rivals, so they can command greater advertising income. So naturally all journalists will try to look for the extreme view, the exagerated look, or the pinpoint the most dramatic story. They don't care if the most exagerrated view is positive or negative, as long as its a headline-grabber, a seller!
At the moment, everyone is worried about the economy, about their jobs and wondering when things will improve. The media plays on these fears, knowing they are what people will buy, and so all the stories are doom and gloom, shock and horror. You would think it was the end of the world!
The property market is largely led by popular sentiment at the time. Popular sentiment is of course led by the nose by the media. The media doesn't just lead public opinion, in fact it very largely determines it. The media, through the distortion of reality to favour the stories and viewpoints it knows will sell copy - actually creates a self-fulfilling prophecy. The self-fulfilling prophecy created the market to bubble as it did, and will now create the market to slump beyond what is reasonable.
There are a lot of bitter London 'journos' out there who cannot afford property, are chasing a better salary, and are revelling in the fact 'prices are dropping' and people infinitely more successful than them are facing difficulties in business and their investments. A lot of it is down to jealousy and feelings of inadequacy. Not many of the hacks, some who are not old enough to have experienced a market cycle, can claim to have invested in their own home, let alone have any financial success (be it property, stocks or a business) - yet these 'New Experts' are charged with grabbing the attention of the nation by playing on their worst fears.
Strangely enough - I say, "bring it on! don't stop!" Those Oxford educated know it alls, sharing some rented flat in London while moaning they can't afford to buy because of 'greedy speculators forcing up prices', are actually my new best friends! These same promotion-hunting, ego-starved idiots are doing me and any other investor with a bit of nous and flair a massive favour.
Firstly, they are actually helping me in negotiations with distressed sellers, who a year ago wouldn't consider selling at 10% discount, and now are biting my hand for a 25% discount - on an already deflated price! I actually cut out newspaper articles and use it in literature I send to vendors - they won't believe me but are much more likely to buy into the nonsense peddled by the Guardian, the Sun (to take two extremes) or whoever.
The second spin-off is that the market will be talked below a point what it is actually worth, if it hasn't already happened. The end result will be, when it turns - it will turn quicker and harder than people can imagine at the moment.
The final spin-off is that the vast majority of 'investors' are sheep in disguise. The current market conditions has cut down vast swathes of them, and now property is a 'dirty word'! (Good).
The fairweather investors who only got into it because they know someone who bought an offplan and made a mint, so they feel it the 'in' thing they 'must' do. The same investors who bought 250k apartments in cities they have never visited (and probably still haven't), which could only command 500pcm even if you were lucky enough to find a tenant in a block of 50 identical flats all completed by the developers in the same month. The same investors who bought a property on a whim and a fancy brochure - then go on Trevor McDonald and moan about how they were "ripped off" and "don't buy property, or you'll end up like me!". They are the same investors who ruined auctions 6 years ago because Sarah Beeny and Homes Under the Hammer peddled the myth of easy fortunes - the same shows now consigned to obscure channels (they obvously don't pull in the punters, so don't get the same advertising revenue...)
So to conclude...the media is: Helping me negotiate insanely low prices from vendors who would never have agreed such discounts at any other point in the last 20 years...Scaring off rival 'cashbuyer' companies, reducing competition and allowing me to negotiate harder... not to mention scaring off would-be first time buyers and other amateur investors - who would otherwise steal deals from me by paying much more than I would want to...Forcing the market downward beyond what is reasonable, just as they did when they talked the market up beyond what was reasonable, by refusing to give a balanced view (it doesn't sell papers or get people jumping for the remote control)...
The media - hopefully YOUR new best friend, too!