Why do the media portray property markets as boom or bust?

If you were to look at the online property news today you would see an array of boom and bust forecasts for various property markets around the world. Each day seems to bring yet more joy or gloom to the real estate market with many suggesting the media have too much influence on property investor sentiment.

Even if you believe that a certain property market is well set for the future it is difficult to keep that momentum going with constant negative comment in the wider media. We have seen this with the London property market, the same is true of Australia and there are many different markets suffering a similar fate. Trial by media……

Media does impact sentiment

Whether we like it or not the power of the worldwide media, both online and off-line, does have a major impact upon short-term sentiment. Even though markets do tend to balance themselves out once the short term shock has hit, it can weigh on sentiment for some time making investors cautious. The simple fact is that the headline “London property market doing ok” does not catch your attention anywhere near the same degree as the headline “London property market in freefall”. Attention grabbing headlines sell newspapers and that is the bottom line.

Taking advantage of short-term sentiment

As many investors in stocks and shares will confirm, erroneous negative or positive stories can very often create lucrative situations for professional investors. If through all of the good news, or the bad news, you can keep a clear head about the “real picture” it is possible to make some good money.

Property perhaps more than any other asset should be seen as a long-term investment although there will be mini boom and bust cycles over the years. Looking at the more prominent worldwide property markets the general trend is higher helped by economic situations, a growing worldwide population and in many cases limited new build numbers. If you could shave a few thousand pounds off the cost of a property because of a short-term scare why not do so – if the long-term picture remains intact.

Alternatively, if you were to squeeze a few thousand pounds more from a property sale because the area has been deemed a “hotspot” then why not take advantage of this short term situation before a market turns?

Cold hard facts

As we have mentioned on numerous occasions it is vital that you stick with cold hard facts when looking at any investment asset. Sentiment will to a certain extent impact the short term value of assets but if the long-term picture remains intact there may be opportunities for savvy investors. If the long-term situation was to change, perhaps prompted by a short-term change in sentiment, then by all means revisit and reappraise your investment strategy.

However, those who create the greatest return from property assets (and any other asset) are those able to see through the short term mist and keep an eye on the long-term situation.

Leave a Reply

XHTML: You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>