The media can take a fair chunk of responsibility for talking the housing market deeper into decline in 2007 than the economics of things actually dictated. The print and broadcast mediums flogged prophecies of an impending house price crash so avidly that in the end that is exactly what happened. Transactional volumes have still not recovered as many ‘wait to see what happens’ further to original news reports of ‘values that are due to plummet’, ‘40% price corrections’, and so on.
In today’s Daily Telegraph there is a similarly over sensitive article that speculates that prices will drop markedly again.
Their assumptions are based on a Rightmove report on March prices to date which show that they are up (yes, UP) but by a small amount. Importantly, it’s an overview of asking prices not sold prices. There is a huge difference in the relevance of the two but as ever, one must not let the facts get in the way of a good story.
The Telegraph also drag ‘expert’ Capital Economics into the quotation spotlight, who are well known doom mongers and ‘glass three quarters empty’ merchants who strike me as being the most depressive and negative group of people ever gathered together. Perhaps they were once collectively bullied by a property developer or humiliated at the hands of a buy to let landlord or something?
CE say that they ‘expect house prices to fall further’. But then they always do. If they were ever proved correct one day, you’d be able to pick up a three bed semi in Chelmsford for the cost of a cup of tea.
Let’s not get carried away, by ‘over reporting’ on insubstantial numbers that wrist slashers like Capital Economics will inevitably always jump on to back up their proclamations of crashes, meltdowns and so on.
Markets fluctuate. And whilst one swallow doth not a summer make, neither does a single fluffy cloud dictate a winter storm.