Critical comment on the housing market is to be welcomed but why is MoneyWeek so relentlessly negative?
You can count on one hand the number of people in the media who are persistently bearish about the housing market.
These voices are a valuable and necessary corrective to the general upbeat coverage of the property market.
What I find fascinating is the lack of balance in MoneyWeek’s discussion of the subject,
Somerset Webb, for example, recently pitched in with a piece on renting vs. buying, confidently arguing (on the basis of Zoopla research, and more robust Capital Economics analysis) that it’s better to rent at the moment and warning first-time buyers to stay out of the market.
That may or may not be the case. But while she warns first-timers to steer clear she also warns investors that property is a disaster waiting to happen.
This seems inconsistent. If it’s a great time to rent (and this ignores the rising cost of renting, the insecurity, and the desire of many to own a home), then surely it’s a good time to be a landlord?
It seems that MoneyWeek is happy to collapse the difference between landlords and first-time buyer because they are opposed to any involvement in property.
On the home front, property, they insist, is too expensive, and you’ll be scorched by negative equity; while on the investment front this hardnosed financial magazine can see no good whatsoever in making money from the housing market – indeed, they strike a decidedly moralistic tone on this:
Between 1996 and 2007, investing in property looked like a dead cert.
All you had to do was buy property and then sit back and watch it soar in value without lifting a finger. It was the nearest thing to free money you’ll ever see… and people got drunk on it.
Fair enough, it all got out of control (though in fairness, for many it was a dead cert!). And it should be added that the housing market is not unique in being prey to irrational exuberance. The equity markets, after all, come with risks and are not noted as bastions of sobriety and well-meaning philanthropy.
For MoneyWeek, curiously, there’s simply no upside to property. Ever. It’s bad to buy if you need a home (they warned against it relentlessly during the boom, and now they warn against it repeatedly during the bust), but it’s even worse to buy if, you lazy tyke, you want to make money from bricks and mortar.
Is there, you have to wonder, ever a right time to buy a property?
Now these are not stupid people, so why the absolutism and the moralism when it comes to property?
They tell us “here at MoneyWeek magazine we don’t have an agenda, or any vested interest in telling you one way or the other”.
But with property, the advice is, as far as I can tell (happy to be proved wrong on this), is always one way.
Why? I don’t know for sure, but there are a couple of possibilities. The first is that there’s interest to be generated from taking a view at odds with the general consensus.
The second, perhaps more cynical way to explain this, is to take a look at their advertisers (spread betting firms, investment trusts, financial institutions) – all vying for the money that gets invested in property – and draw your own conclusions.