Is the UK media feeding the house price bubble?

Is the UK media feeding the house price bubble?

Is the UK media feeding the house price bubble?

Despite the fact that the Bank of England has highlighted the potential of a house price bubble in the UK, the UK government is becoming more concerned and there is talk of overheating, it seems that investors are still being encouraged to buy UK property. This feeding frenzy is in many ways being encouraged by the UK media which continues to run stories about attractive property price improvements in the short to medium term. So, is the UK media part of the reason why we are on the verge of a house price bubble in the UK?

Before we look at the UK media’s role in the UK property sector it is worth noting that historically, and this will happen forever and a day, in the good times the news stories are always positive but when the crash comes, all of the good news suddenly disappears!

Unrealistic expectations

Even though there was some relatively good news on the UK economic front this week, with an upgrade in GDP from earlier this year and signs that the economy is moving back towards growth, the UK property sector is certainly out of sync with the UK economy. Just today we see forecasts of an 11% increase in UK property prices over the next three years which when taken in tandem with an expected increase in rental income makes for a potentially interesting environment for UK property investors.

Quote from : “Location is still the most important issue for the majority of UK house hunters with over 50% prioritising the location of their home over the size, according to new research.”

While we are not saying that we could not see an 11% increase in UK property prices in the next three years, how anybody can be so specific, especially bearing in mind the difficult economic situation in the UK, is a little puzzling.

Creating a bubble

We have seen this in investment markets, we have seen this in money markets, the mass media focusing upon one particular investment arena, which attracts a flurry of investors looking for “easy money”. While we are not comparing this with the US mortgage market ahead of the 2007/8 collapse, this is perhaps a perfect illustration of how the phenomenon of “easy money” can push markets to unsustainable levels where in reality the only way is down.

The Bank of England, after initially suggesting that UK base rates would not increase until after the election in 2015, has now confirmed a proviso that it would look at taking action if the UK property market continued to push ahead to unsustainable levels. The fact that Mark Carney has specifically mentioned taking “personal” action if he saw the creation of a house price bubble should in theory deflate investor interest in the short term. Whether indeed this will be the case remains to be seen because in frenzied markets the reality of the day is often ignored until it is too late.


There is no doubt that the UK media has a role to play in all investment markets although whether we are currently seeing a balanced approach to the UK property sector is a matter for debate. There is every chance that suggestions of an 11% increase in UK property prices over the next three years will attract more investors, especially when taking into account expected rental income increases, which could cause significant problems in the short term.

The media in the UK perhaps need to take a more balanced approach, highlight the positives and negatives of investment in UK property and not continue to feed the frenzy we see before us today. A long-term approach to UK property investment is more sensible, potentially more lucrative and should help us to avoid the historic highs and lows, booms and busts of years gone by – well it all sounds good in theory, until human nature, i.e. fear and greed, take over!

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