Property Journalists or Property Professionals?

If you are a frequent reader of the blog here at IPIN, you'll likely know that the press invariably get my goat when it comes to the property market with their poor analogies and comparisons....

If you are a frequent reader of the blog here at IPIN, you'll likely know that the press invariably get my goat when it comes to the property market with their poor analogies and comparisons, and constant quoting of average statistics released by institutions that may or may not be conveniently launching a new mortgage product that will miraculously get everyone on the housing ladder.

Of late however, a couple of things have popped up, one more likely down to some PR that was not well-explained on release (although nevertheless a good idea if it all stacks up) the other a serious case of "Oh no, we need an article - let's merge some numbers and call it news".

The first is about a new property fund designed to help first time buyers (FTB) by providing 95% funding from their own investment fund - rather than the buyer needing a mortgage.

Whilst it sounds like a novel and helpful idea, further information is a bit on the thin side as to how it all works insofar as how the fund investors make money, and how the fund managers make money out of it. Aside from that, they fail to explain quite what happens if the property market dives further still - who takes the losses? The FTB or the fund investor?

Whilst I will admit I have not gone to the extent of contacting the fund managers about all the ins and outs, it does seem to have caused a lot of noise. If it works - great. The housing market needs a boost, and FTB need all the assistance they can get. If on the other hand it's a negative equity-generating monster like certain shiny new mortgage products that have been released of late, then avoid like the plague, both as an investor or FTB.

The other "news" this week that got my goat is what would appear to be the result of either two "journalists" with a stack of papers colliding in a hallway after getting back from a heavy lunchtime session and picking up the wrong articles, or someone has thought it fit to overzealously copy and paste from some random documents.

According to the Telegraph, high street sales have boomed, and house prices have gone down.

My first point with this is what one month of consumer spending data has to do with house prices? The answer is simple - nothing.

Contrary to what the media would have us believe, house prices were actually up last year on the whole.

Consumer spending in January, believe it or not does go up. It's called the January sales. Love them or hate them - estate agents don't have January sales.

Whilst the property industry in general has had a tough time over the past couple of years or so, one can't help thinking that a large portion of blame now really needs to be laid at the feet of the press.

I will agree that consumer spending figures have an effect on the economy at large. How much useless (yet now oddly "well-priced") junk gets bought in the sales does not. Don't get me wrong, estate agents have their responsibility to uphold as well, we have all seen phrases like "5 minutes from the nearest tube station" which, in reality only works if you happen to own a spaceship, or "spacious living area" which upon inspection translates as "not enough room to swing even the smallest of cats".

The difference here is substantial. If you go and look at a poorly described house, it should be fairly apparent at the time. Yes it will have wasted some of your time, but that’s about all. On the other hand, if you are trying to balance some figures and make an educated investment decision, most are reliant upon the press for input.

I have commented on this before when The Times decided to hide it's content behind a paywall, which has resulted in a drop in the number of fanciful and somewhat opinionated best-guess reports from the press about the property market. Perhaps the press should start charging for inaccurate, poorly reported speculation about property prices and the recession might finally begin to fade away?

In November we ran a poll to ask if you thought the press were helping the UK out of a recession or merely prolonging it, unsurprisingly at the time, the consensus was that 85% of respondents thought the press were not helping.

Needless to say, if you want to know about the housing market and what it's doing, ask someone that knows. You might not like what they tell you, but as long as they are not in the business of selling papers or mortgages, there is a chance it might be unbiased.

- Thursday 10 February 2011

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