Do the media have undue influence on property markets?

If you have an interest in the real estate market you will no doubt notice the array of very different and very eye-catching headlines each and every day. It very much depends upon which media company you follow but in any one day you could see headlines suggesting your local market is flying high, demand is falling and other headlines suggesting property prices are on the verge of collapse. This begs the question does the media have too much influence over property markets?

Before we start, perhaps the reality is that the media has too much influence on our everyday life not only the worldwide real estate market?

Political persuasion

Each and every media company you will come across will have some political angle, political ideals and will either slant to the right, aim for the centre ground or slant to the left. This is what separates media companies and this is what attracts readership and popularity. Therefore, with property being perhaps the most persuasive of political arguments it is no surprise to learn that the headlines in your favourite newspaper and websites are often influenced by politics.

Quote from PropertyForum.com: “Bank of England all talk and no action on UK property boom”

Following the crowd

One of the most common occurrences in the worldwide property market is the fashion for following the trend (“the friend is your trend”) which many newspapers follow as well. It makes much better reading to hear that your property market is flying high, prices are moving upwards and the feelgood factor is returning to your country. In many ways media outlets are also scared to move away from the mass market opinion for fear of getting it wrong and perhaps losing their reputation.

Overexuberance

You will have noticed that when property markets are doing well, all the headlines in newspapers and magazines fill you full of enthusiasm for the future. Research analysts will continue to plough customer money into the marketplace, even those who have been sceptical will eventually change their minds and the mass wave of overexuberance can and does have an impact upon traditional investors. In many ways it is the fear of “missing out” which pushes many people to follow the trend and perhaps those who have been thinking along the right lines, and been more sceptical, are the last to give in – potentially leading them to buy at the top of the market or sell at the bottom.

This is where we get the massive swings in overbought and oversold positions in investment markets as a whole, and possibly more than others, the real estate sector. There seems to be no “balance” in many media publications with editorials either very positive or very negative because at the end of the day a “non-event” story does not make headlines.

Do your own research

While there’s no doubt that you should take the opinion of a wide range of property experts on board when looking at your own investment strategy, you also need to do your own research. Sometimes there are significant profits to be made by digging below the surface, looking at the barebones statistics and ripping out human emotion from your investment decisions. Can you imagine the feeling if you see the headline “UK real estate market collapses” and you have all of your pension fund assets in this particular sector?

Even though you believe the UK market may have long-term potential for significant growth, the drip feed of negative headlines can and does impact your decision – unless you stand firm. So, in many ways the media do have a major impact upon investment decisions, investment strategies and the way in which investment markets move. However, you can balance this out in your own mind by doing extensive research, knowing your market and only reacting when you are ready, not when the media is telling you to buy or to sell.