Media fuelling negative sentiment

Discussion in 'Property Market Economics' started by Blueskies, 2nd Sep, 2018.

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  1. Blueskies

    Blueskies Well-Known Member

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    Is it just me or has the tone in the media taken a sharply negative turn towards house prices in the last few months?

    Every second day now it seems when I go on news sites there is a new article about either house price falls, looming corrections, mortgage prisoners, loans declined, clearance rates falling etc.

    Now I always take these with a grain of salt, because they were saying a lot of same stuff when Sydney was shooting the lights out the last few years, but I think the volume of these has definitely increased of late and are now being backed up by some more reliable evidence.

    I think this is significant because it starts to feed that negative feedback loop in the wider population. A lot of what is being reported now has been said on this forum for over a year or more, which for me just highlights the great value of this site in getting the early info.

    But what worries me now is that I am hearing people at work and around the BBQ talking about some of these issues. A lot of price falls/crash are sentiment driven, and from what I am seeing the tide is definitely turning.

    Now I am not saying that for me this is a big issue, I am in for the long game and in many ways it it is steady as she goes, though I am starting to review my stategy slightly in response. What are others thoughts, same feelings around the water cooler?
     
  2. Propertunity

    Propertunity Well-Known Member

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    The tide turned some time ago. The media is always late to the party and just jumps on any band-wagon trending at the time.

    It’s just noise. If you want to go nowhere, follow the crowd. I and many others have made money by doing the opposite of what the media (and the RBA for that matter) says.
     
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  3. Blueskies

    Blueskies Well-Known Member

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    I agree that the popular media is a lagging indicator, and no use following the crowd.

    It is more just the feeling that we have recently passed a bit of an inflection point where now the wider population sentiment has turned negative, which also then feeds the negative news cycle.
     
  4. sash

    sash Well-Known Member

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    On this I agree....this sentiment has a huge part to play. It is called the Psychology of the market.

    At the moment...the media is very negative about Sydney and middle/inner Melbourne. They are dropping...not only due to sentiment but because of the ceilings put in prices people can pay due to lending restrictions.

    The trends happened from earlyy 2016.....unfortunately taking action now might be a tad late....but it depends when you bought in Sydney and Melbourne.

    Only mad men and englishmen (phrase) jump in now....

     
  5. hammer

    hammer Well-Known Member

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    Don't forget that large swathes of the media are younger 20-30somethings who have been priced out of Syd/Melbourne.....
     
  6. ChrisDim

    ChrisDim Well-Known Member

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    Hi @Blueskies. Media companies love negative news and they'll have you thinking the sky is falling. I worked in that industry in a previous life and I can tell you for a fact that bad news increase newspaper circulation and website traffic. I know that for a fact as I was in charge of the projects that built some of the biggest news websites, mobile sites and apps in Australia including the one you're referring titles from above... I will not mention names but that website alone had 5 million unique visitors a month! think of the influence that kind of audience has on sentiment! Have a read on this article I published recently on my website just on this point. And this article on vacancies... Keep in mind I am only talking about Sydney and Melbourne as these are the areas I know best from my own properties and NextGen, but that's not to say the same concepts don't apply to many other parts of Australia - including Brisbane, Adelaide, Geelong, Newcastle, Canberra etc.

    Yes, times are tough but I would look at the facts and wouldn't be too quick to change my strategy based on what I read online. Also, keep in mind that just as everyone thought during good times bad times could never come, everyone thinks right now that good times can never return which is not true... In a few months, these suffocating lending rules will be loosened. No doubt about it. They are stalling our economy from growing and that's no good for anyone - financial institutions included. There is a flow on effect on every aspect of the economy and there is no real reason to do so, other than stop house prices from growing which has been achieved! Stay true to your strategy and don't take any notice of media... :)
     
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  7. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    perception is reality

    ta

    rolf
     
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  8. ChrisDim

    ChrisDim Well-Known Member

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    sure... that's why we should fight negative sentiment where we see it... including on this forum right here. Can you imagine what it's like for a young investor right now or anyone considering buying for the first time? And the irony is that some of the best times to get in the market are just ahead! :):):)
     
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  9. hobartchic

    hobartchic Well-Known Member

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    I was half watching the news last night and they said that prices had gone down, but that "prices always rise" so it's hardly gone very negative. If you wait for the media to report market sentiment though, it's generally too late. Ditto water cooler.
     
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  10. Triton

    Triton Well-Known Member

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    Tighter lending for mortgages are suffocating the economy? How are high mortgages good for the economy? They reduce discretionary spending which is bad for retail and retail employs millions of Australians.
    I would argue otherwise
    Is household debt ruining the economy? | this.
     
  11. ChrisDim

    ChrisDim Well-Known Member

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    Some good points on this article and yes a lot of pulling back was necessary but not to the extent that it has... To be fair I didn't think there was a problem in the last few years with the retail industry, whereas I suspect by putting the fear of God into everyone with this uncertainty - and not just investors but mums and dads and anyone that bought recently - we will see a lot of pulling back everywhere and retail will be the first to suffer. Just my view.
     
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  12. DrunkSailor

    DrunkSailor Well-Known Member

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    has the media reported on anything other than what’s taking place and reasonably expected to unfold? There’s no Steve Keen this downturn calling a 50% crash. The media has reported on a softening auction volumes and declining values. I haven’t seen any articles saying the market will crash. Just quotes from the banks and economists that the market will decline by ~15% by 2020 but a collapse is not expected.

    The hyperbole I can think of is calling this a credit crunch. Talking about 1200% refinance rejections and 1 million houses in mortgage stress which has come from Martin north (the 2018 Steve Keen). And the IO reset peaking in 2019.
     
  13. Sackie

    Sackie Well-Known Member

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    I hope they keep fueling negative sentiment. Some fantastic deals in certain areas.

    One thing I very strongly believe in is if you buy a deal at a good price in a high demand area you will do well medium to long term. The psychology of the market is fickle at times but when the dust settles it usually always goes back to demand and supply prices. Seen it in many markets . But the key is:

    1. Buying at a good value
    2. Buying strong demand low supply markets/stock where buyer sentiment will snap back in the future when the ' fickleish madness' is over .

    Some amazing fortunes were made this way.
     
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  14. BST

    BST Member

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    Sorry Chris retail has been doing it tough for a number of years now. This was all over the media and continues to get mentions. I believe retail in Aus has suffered for a number of reasons -

    1. Bricks and mortar stores have suffered due to online. Amazon coming is another headwind. Note the Lowe family have sold Westfield!!! Dick Smith gone!

    2. Increased competition from overseas giants. Previously Australian retailers didn't really have to compete with Zara, Topshop, H and M, Uniqlo. Note that Topshop packed up and went home. Conditions here were too tough.

    3. Wages have not risen a great deal since GFC and Australians now have record household debt. Large personal debt across an economy is not good for retail - as you have noted retail will be/has been amongst the first to suffer.
     
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  15. kierank

    kierank Well-Known Member

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    One of my favourite quotes is:

    “Perceptions may not be the ultimate truth BUT they are what people use to make decisions”

    American Institute of Creative Learning
     
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  16. highlighter

    highlighter Well-Known Member

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    One minute I start hearing the words "orderly correction" and now I get a reminder of the "media negativity to blame" theme that was popular during the crash in Ireland. It's like things-I-vaguely-remember-from-2006 bingo. Here's an example: Let's own up to our part in the burst bubble

    The media were very often blamed (and like in that article eventually blamed themselves) for either growing or bursting the bubble, or both, and I have to admit there was an absolute torrent of negative media stories during the crash. It came from all angles too. Here's a sob story. Look at this silly investor. Banks to blame. Bernie to blame. They were just everywhere, and in comparison to the pre-crash stories (the typical "economy doing great", stroke the Celtic tiger stories) I do think the negative just dwarfed them. I often wonder how much of a part it really did play in getting a panic going, and I suspect there was an impact. Scandenfreude sells. But then it would probably have happened anyway, and people probably wouldn't have paid so much attention to the crash stories if they weren't in a panic. Or would they not have got into a panic unless... I feel like I just talked myself into a "what came first, the chicken or the egg?" paradox.
     
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  17. DrunkSailor

    DrunkSailor Well-Known Member

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    Doom and gloom = profit for the media. AFRs readership has gone up 23pc. More people worried about what’s happening will sign up for up to date articles. Reddit’s ausfinance also saw a ramp up in subscribers since last year.

    The media had to push doom and gloom to make money. Which explains why msm sentiment is the market is crashing but you go outside and everything’s fine.

    People have been aware of the media’s manipulation forever.
     
  18. DrunkSailor

    DrunkSailor Well-Known Member

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  19. Perthguy

    Perthguy Well-Known Member

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    I thought IO reset peak is 2020?
     
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  20. berten

    berten Well-Known Member

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    To be fair, journalists are not property experts. They are going to report what is filtered down to them, but I've not heard anything particularly untrue. The data is there for anyone to follow and there is no arguing that Melbourne and Sydney are experiencing accelerating declines with strong headwinds ahead.
     
    Last edited: 5th Sep, 2018
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