London Residential Property Market Crisis - Article Example

How the Medias Coverage of the London Residential Property Market Crisis during 2008-2009 Has Affected Public Opinion How theMedias Coverage of the London Residential Property Market Crisis during 2008-2009.2010 Has Affected Public Opinion The London residential property market has a robust potential for a variety of consumers from both the local and the international scene. Residential property is a ground leveler that offers diversification of risk and enhances profits. In the UK, the residential property market had been performing excellently before there came the worldwide financial crisis that affected almost all aspects of the world economy. The London residential market did not remain out of the 2008-2010 crisis impacts. In fact, it was hit so hard that most of those involved had to consider options. One way in which the world got the information was via the media. The way people react to the information from the media depends on the language and way the media expresses this information. Media can influence public opinion, which in turn, not only affects the public policy and programs both directly and indirectly but also the perception of the individual people. Given that almost everyone interested residential property market in London has access to information from the media, there is a possibility that the information they get might influence their decisions regarding their participation in the market. Pessimistic phrasing in the media such as ‘residential market crash’ or ‘bursting housing market bubble’ or housing crisis, as opposed to optimistic phrasing such as ‘soaring home prices’ have an influence in the market perception and influence the decision that home buyers and sellers make. This paper will keenly look at how media coverage of the London property market crisis during the 2008-2010 periods has affected the public opinion. The importance of having a decent home cannot be underscored. It is essential to the health and emotional wellbeing of an individual, ability to get to work, educational achievements and indeed, every sphere of life. Having a comfortable house is crucial as comfort relies on the perception of the individual and depends partly on the prevailing housing policy and programs. The status in London is not promising. There is an increased number of homeless people sleeping on the streets as affordable housing becomes a rare commodity. As we all know, London is a first class city that has a well developed housing system that attracts even foreign settlers (Hurford Salvi Carr, 2012). The media report of the crisis reflects on the prevailing low confidence level on the London residential property market, characterized by a variety of factors. Those people living in London without a stable income supply have the worry of eviction one day because of the rising cost of housing that resulted from the crisis. The high cost of buying or renting a home in London has a direct impact every one’s life, be it the young desperately trying to save or any hardworking family struggling to maintain a mortgage or one that spends an enormous chunk of their income on rent. Consequently, it is essential to look how the media reported on the London housing crisis and examine how it has impacted on the prevailing public opinion and indeed the policies that exist today. Since most people do not have direct links with housing property market, then they have to depend on the news and information from the media so as to make their decisions. The media reports from early 2008, at the beginning of the crisis, contribute to the present public opinion. The continued bombardment of the public with negatively phrased articles by the media especially the newspapers cast aspersion on the London property market. Like the stock markets, public confidence in the real estate as well as the housing policies is crucial, and it can only exist if based on the available information that the markets look promising and stable (Hurford Salvi Carr, 2012). The more people have confidence, the more they tend to purchase while prices will continue to rise. A factor that negates, erodes, or hampers the public confidence, in most cases does eliminate the urge by the people to delve buy property, which in turn affects the prices of houses. When an individual hears “the London Residential Property Market has collapsed”, then obviously, they would avoid any relations with the effects of the loss thus choose to avoid any transactions. This is what happened during the crisis whereby there was nonstop negative reporting from the media. For example, daily mail published an article captioned ‘is there going to be a house price crash?’ the writers predicted a potential property slump coming ‘thick and fast’. It forecasted a negative impact on buy-to-let landlords, and first time buyers suggesting that houses in London and some other areas are overpriced and were likely to come down (Hurford Salvi Carr, 2012). Consequently, such information from the media erodes the confidence of the public and negatively changes their opinion in the property market and deterring new buyers from venturing into the market. However, this might be the aim of this information so as to warn people from risking their investment. It is clear that they do get the attention of consumers as they tend to stay away from possible loss. The media also had effects on the opinion of the people regarding the possibility of using mortgages to buy houses. When potential buyers hear that ‘mortgage approvals hit low as buyers retreat’, they lose their confidence in the banks and would rather find alternative methods of finance. This is most likely because they believe that if other buyers are retreating, then they would rather not indulge the bank offers. As a result, the total mortgage advances dived to a down low during the financial crisis and banks had to step up their game to convince people to apply. The reduced market confidence and reduced borrowing made the banks had to give large loans to homeowners who could not afford them. This promoted the Financial Services regulator to intervene and control the total taxable amount that any person could borrow so as to curb this behaviour by the banks (Hurford Salvi Carr, 2012). Therefore, the lack of buyers that resulted in putting downward pressure on the prices of houses was a consequence of information from the media. This information had twin negative impacts on the opinions of the people. First, it discouraged potential buyer from investing, and then it also it hit the money markets with reduced financiers willing to lend to would be borrowers given the inherent risk that faced such an undertaking. However, not only were the potential investor affected, but also the content owners such as banks and house sellers of the property market. When they obtained information about the crisis and the probability of a change in public opinion about market prices, they took advantage of that fact so as to benefit. Indeed, the financial sector had started tightening on credit from early 2009 (Hurford Salvi Carr, 2012). Coupled with the impact the mortgages and financial sector had, such information from the media was likely to decrease the confidence of the players in the market given the volatility and unpredictability of the market. Another area likely to affect the public opinion was the reporting and passing of information related to repossession of the houses by the lenders. A series of reports highlighted continued repossession of the houses especially in London. These were cases where the buyers could not meet the high costs and interest rates added on top of what they had earlier committed themselves. Information such as ‘repossession fears as government cuts support of home ownership’ from the media does not benefit anyone who had dreams of buying a house. Therefore, in London as in the rest of the country, this information from the media was likely to instill fear and change the opinion of the would-be-borrowers who noted the default rate. As a result, most people shied away from participating in the London residential property market and preferred other options. The media passed the information to the public that showed that the housing policy was responsible for the London housing crisis. The London housing crisis is a dramatic illustration of the failure of the national housing policies over the past 30 years leading to high exported costs and personal debts (Hurford Salvi Carr, 2012). Nothing better explains this public perception than in the runner up to the mayoral elections, whereby the candidates sell themselves on the platform of addressing these inadequacies in policies, so as to capture the attention of the voters. Housing policy towards the main tenures-the private rented sector and housing association has encapsulated the theme of promoting the market relations in housing. As a result, the public now know that the reason why the crisis of high inflation rate seriously affected the housing sector was because of poor housing policies (Hurford Salvi Carr, 2012). From the media, one learns that the lack of investment in new buildings encouraged by the housing finance system has been matched by a lack of investment in improving the quality of the housing stocks. Despite the fact, that councils have been able to spend the capital receipts from the sales of dwellings on repair, levels of investment has not been maintained in the face of HIP cuts and ageing stocks. In the owner-occupied sector, there is evidence that owners who spend a high proportion of their income on their mortgage and those heavily affected by interest increases have been unable to meet the maintenance of their properties (Hurford Salvi Carr, 2012). With this information, one can know that there has been an increase in the interest rates on mortgages or loans as a result of the crisis thus avoid indulging themselves. It is clear that people with the responsibility of selling houses and lending money to the buyers do not want to bear the weight of the crisis alone and, therefore, buyers have to shoulder this responsibility. In sum, the London residential property market receives a lot of media coverage filled with reports, analyses, trends, and speculations of how it is performing. Unfortunately, most of this coverage is negative in nature regarding the status of the housing market especially on the 2008-2010 crises. Many negative terms were used to refer to the residential property market of London that affected public opinion in mostly negative ways. From the above information, we can see that most of the people chose to avoid investing in the London residential property market. This attributes to reason that they did not want to risk losing their investments, or because they could not afford the rising cost of housing, and high bank rates. They made these decisions based on the information they obtained in the media. Therefore, we can come to the conclusion that the coverage by the media about the London residential property market crisis during 2008-2010 affected public opinion in a negative way that made the people look for alternative methods. Reference Hurford Salvi Carr. (2012) Midtown, City and Docklands Residential Review 2008. [Online] Available at: http://blog.hurford-salvi-carr.co.uk/research/research-08.pdf [Accessed: 27 April 2012] Read More