There is an old saying that advises “believe half of what you see and none of what you read” (except my articles, of course). Unfortunately, this saying applies to much of the media’s reporting of the property industry.
Over the past 20 years, the Australian real estate industry has become a national obsession.
Television shows dedicated to property dominate prime-time viewing on major networks. Daily newspapers and their associated websites devote entire sections to the real estate industry.
Property magazines assess the property market in each state and territory on a monthly basis.
This media attention not only provides information to buyers and sellers, it has also become a form of entertainment for many people.
One of the major reasons for this property obsession in Australia is the unprecedented appreciation in property prices over the past 20 years. More people than ever, both local and overseas, now want a piece of the pie; the public’s appetite for property information has become insatiable.
This increased demand for information has seen the advent of the “property reporter”, a role that now runs to a cast of thousands.
How creditable is this reporting and how can property buyers decipher fact from fiction among this deluge of information?
Firstly, television producers, newspaper reporters and magazine editors aren’t privy to property transactions; they don’t liaise directly with buyers and sellers on a regular basis. Accurate reporting relies on them being able to make judgements on what are creditable sources of information.
In order to make informed decisions they must have a basic understanding of the mechanics of the real estate industry. Some reporters, in my opinion, don’t have this fundamental knowledge.
An example of hazy reporting was a recent article in The Age
headlined “Melbourne’s best yielding suburbs”, which focused on residential property.
Residential real estate is an appreciating asset. An investor’s success or otherwise is based on capital growth performance, not the level of yield. The level of yield is a high priority for commercial property investors, not residential.
The article did not make this clear, which could be to the detriment of inexperienced investors who may have read the article and be contemplating entering the market.
The media industry is extremely competitive; and, just like any other reporter, property writers are under pressure to come up with attention-grabbing stories.
This competition may mean a newspaper or magazine prints articles that are sensationalist in an attempt to lure people to buy their publication.
We saw this recently when The Age
ran a story titled “Australian housing market facing ‘bloodbath’ collapse: economists”.
The article quoted two observers who claimed Australian real estate was substantially overpriced and there would be a massive market decline.To my mind, these claims have not been convincingly backed up with facts.
claims to be the leading Victorian newspaper for real estate, and it is critical that all reporting is undertaken independently, without fear or favour to anyone. Many readers trust reporting to always be creditable and will make financial decisions based on what they read.
Of course you should keep up to date with property trends through the daily press – but balance this by filtering information from a range of real estate commentators, from advocates to agents to builders.
While newspapers pride themselves on being neutral, there are bound to be commercial considerations when it comes to the property pages.
A substantial amount of advertising revenue comes from the real estate industry, particularly large property developers – it is a multi-million dollar industry.
One journalist told me he needs to “be careful” when commenting on issues that are related to these large property developers. He doesn’t want to jeopardize the substantial sources of advertising revenue that these corporations generate.
This self-interest can result in biased reporting to the detriment of property buyers.
Nationally distributed property magazines can also be guilty of sensational reporting. They regularly engage in what is essentially deceptive “bait advertising”. Their front covers proclaim headlines such as “Australia’s hottest emerging suburbs”.
There are many factors that determine the investment quality of a real estate asset; correct suburb selection is just one factor.
These headlines attempt to draw consumers into buying their magazine in the belief that investors can make quick and easy gains simply by buying in these so-called hot suburbs.
Property investing has become the cornerstone of many people’s retirement plans. Biased or inaccurate reporting can potentially ruin a young person’s financial future or an older person’s retirement; there is a lot at stake.
Property buyers should act only on independent advice from practitioners who are actively involved in facilitating transactions through liaising with buyers and sellers.
Taking advice from people who are motivated by self-interest will only result in future financial heartache.