The house price crash always was a matter of when, not if. One year on, the BBC has covered the story again and it's experts all agreed that it has started, that further falls are inevitable and that it was a good thing for the UK.
The Newsnight discussion was prompted by yesterday's Nationwide report showing a fall in house prices for the fifth consecutive month. That means average UK property prices have fallen, month-on-month for 5 months. It's conclusive proof that a crash has started and when you take other factors into account (the credit crisis, rising inflation, American recession, possible UK recession, mortgage interest rates going up – yes, up) it looks like it will be prolonged and severe.
But there are two sides to every story and who better than the Daily Express (self-proclaimed as "The World's Greatest Newspaper") to tell the true story? "House prices still on the rise" is today's front page story in an undisguised attempt to sell more newspapers by telling their punters what they want to hear.
The article helpfully points out that prices are 1.1% higher than a year ago, without mentioning that the market has been falling non-stop for 5 months. Using that logic, we see that the stock market is on the rise too. The FTSE 100 is higher than it was 3 years ago and it's much higher than it was 20 years ago. Why are traders so gloomy?!
Back in the real world…
- Nobody can forecast accurately how severe this crash will be. There are too many unknowns – how deep can the losses get before other banks collapse, how will the public react to falling house prices, how will it effect the economy and job prospects. One thing is for sure, the public has borrowed too much money for too long and the banks have called an end to the party. It's payback time.
- The Daily Express is just another cheap tabloid with no credibility, no journalistic integrity and littered with errors.
- The world's greatest newspaper is actually The Economist. If you have not read it, register for a free weekly email news summary or subscribe here. It is published once per week and only covers issues of consequence. You get to read things that really matter, written by outstanding journalists published as one lightweight magazine.