The Oireachtas banking inquiry, underway in Ireland, has heard of expert accounts on the vital role the Irish media played in hyping one of the world’s largest property bubbles.
University College Dublin academic Dr Julien Mercille told the inquiry, “A number of journalists simply acted as cheerleaders for the property sector.” He said the Irish Times and Irish Independent both had investments in property related websites and made money from property advertising that impacted editorial standards.
It’s a claim refuted by former editor of the Irish Times, Geraldine Kennedy who said Editorial standards where not compromised by revenue from property advertising. “There was no trade-off between editorial and advertising. Advertising features were clearly signposted. Advertisers did not write editorial copy,” she told the inquiry.
In Australia, Fairfax Media owns the Domain Group, while News Limited has a majority 61.6 per cent stake in ASX listed REA Group Ltd that operates RealEstate.com.au. Both news outlets print property lift-outs. In 2006, Fairfax Media acquired property data provider Australia Property Monitors who makes money providing research reports and property price information to “banks, real estate agents, property developers, government agencies, media organisations and consumers,” and employs the regularly interviewed Senior Economist, Dr Andrew Wilson.
Dr Mercille told the inquiry, the media’s ineffectiveness in predicting an impending crash was contributed by three factors – close ties with corporate and government interests, reliance on advertising, and the sourcing of stories. Quoting independent Irish politician and former business editor of the Sunday Independent, Shane Ross, Dr Mercille said “advertising would go elsewhere” if any media outlet gave unfavorable coverage.
On the 12th September 2011, the ABC’s Media Watch reported (‘Biting the hand that feeds, Episode 31‘) on an email sent from Jason Scott, Managing Director of News Limited’s The Sunday Times in Western Australia, apologising to “our valued real estate clients”. The paper had published an unfavourable article suggesting it can cost as much as $20,000 to sell through a real estate agent and reported on two vendors who did it alone. Media watch noted it was the Managing Director and not the Editor in Chief – normally responsible for editorial content, that wrote the apologetic email.
The apology was prompted by Mark Hay, an Investment property specialist who sent an email to almost every real estate agent in the state, suggesting to take their advertising elsewhere, “Can I encourage you to boycott the paper in light of this, or better still this is a perfect reason why we as agents should build our own web site to challenge realestate.com.au [part owned by News Limited] and the others who keep putting the squeeze on us. Anyone interested?”
Dr Mercille responded with a yes to the question if journalists could have predicted the size of the Irish property bubble and the crash when asked by the inquiry, saying analysts working for the papers “invariably [provided] upbeat analysis” and always said it would be a soft landing.
Dublin Institute of Technology media lecturer and former Irish Times journalist, Harry Browne said consumer behavior was fueled by “property porn” produced by the media, both print and television. Prior to the economic collapse the media would deny there was a bubble, “Before 2008, the media tended to largely ignore it and it is only months after it had started deflating that reality had to be faced.”
» Biting the hand that feeds – Episode 31 – Media Watch, 12th September 2011.
» Academic points to media coverage as stoking boom – The Irish Times, 26th March 2015.
» Banking Inquiry: ‘property porn’ in media fed economic bubble – The Irish Times, 25th March 2015
Kevin Nixon says foreigners are puzzled about the entire Australian housing market. Obviously they don’t read the Domain!
News Corp and Fairfax own 11 of the 12 major news papers in Aust. In the US 90% of the news media is owned by 6 Corporations. To say the presstitutes only fuel the housing bubble ignores how they influence all facets of our daily life and even change Governments. Via share holdings they form linkages to all the globe’s major corporations and work in concert for their mutual benefit and protection. The western Main St Media (MSM) also doubles as the propaganda arm of Governments during international conflicts. The support they give to blowing up asset bubbles is only the tip of a very ugly iceberg.
Australia RE is much cheaper for foreigners to buy now. Buy Property in Australia at bargain prices (written in mandarin)
Yes, the cheaper dollar means that Australian real estate is getting cheaper for foreigners. It also means that when they do make a purchase, the capital value will decrease as the dollar continues to decline.
Who, in their right mind, wants to buy a depreciating asset? Hence, I argue that pretty soon we will see a max exodus of foreign investment in our real estate sector as foreigners cut their losses and move into something else (e.g. US equities perhaps).
So if we have the world’s second highest disposable income why do we have the highest personal debt/GDP? Answer: Supersized mortgages feeding a humungous housing bubble all made possible by your friendly junk debt peddlers the Government,Banks and RE Media.
Read chart below and weep.
http://www.visualcapitalist.com/mapping-monthly-disposable-income-around-the-world/
So there is strong evidence that Australia’s main street media is being just as much at fault with our bubble, as the Irish media were with there own. It is a shame, that even though we have been forewarned by 6 years to date, we continue down the same path. History rhymes, and there is nothing that will be done to prevent it, it seems.
http://housing-bubble-australia.blogspot.com.au
@5
Yes, it’s crazy……
But don’t let the pollies see all that undesirable income…. They’ll want more of it…. Hang on, aren’t there already noises about that?
This article only proves the general public are gullible, easily swayed and ‘sheep’. All you need is plenty of money and just hype everything up. History is littered with many such instances. Voting for the same Labor/Liberal parties for decades is probably something most people can relate to. GOD help those few who go against the ‘flow’ as to speak. Keep them coming these articles.
Imagine what will happen to property market here in Australia if Chinas bubble burst and their economy. Like it didnt take a person with just a half a brain to realize they were in trouble. Tell that to Capt Glenn who is a arrogant POS.
http://www.businessinsider.com/chinas-government-admits-things-arent-going-well-2015-3?pundits_only=0&comments_page=0#comment-55199f06ecad04436288dea3
Remember APM was also caught out cooking the Auction Clearance Rates:
Lies, damned lies and auction clearance rates – AFR 2013.
Finally some bankers put in jail for money laundering. It’s only a small country in Europe but its a good start.
Hopefully a sign of things to come in this country.
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/11500130/Andorra-on-the-brink-of-Europes-next-banking-crisis.html
LBS@9, the Chinese are cutting rates again and property in all cities is falling. It seems to be driving more of them our way, evident here;
http://www.auhouseprices.com/sold/view/VIC/371947600/25+Montclair+Avenue%2C+Glen+Waverley+VIC/
$3.9m for 1100sqm in Glen Waverley. The world has gone completely mad. Led by our illustrious leaders like Captn Glen of course.
^ They should rename it Glen Stevenly.
@ Arthur Ponzirelli
Japan had the same problem 1982 – 90 when the land around the Imperial Palace in Tokyo was worth more than all the land in California. Then between 91 to 02 property value collapsed by 80%. Of course that will never happen in Glen Waverly …. according to local RE agents.
Paul Simon “nothing is different,but everything has changed”.
Once upon a time there was an ocean… http://www.youtube.com/wach?v=31ZSADhqGLQ
I am looking forward to the post-catastrophic Australian Housing Crash days soon. Imagine the discussions around the weekend barbecues soon;
“Yeah mate, got burned badly…can’t see me and the misses ever paying this place off in our lifetime. But what really makes us angry is the fact that the mortgage is now valued around three to four times more than what the house is now valued at an we still having to friggin pay it off for the entire amount we borrowed! “Equity mate” my ass mate! What about you…what’s your situation with housing, I know so many couples that split out recently mate because their misses’ just couldn’t handle the fact that all of their wealth they thought they had was suddenly wiped out! Never invest in housing mate, I tell you, it’s a trap. I don’t know how me and the misses will ever come out of this mess really”
@17. Claudem777, lets hope it doesn’t come to that. If it does, they may need to legislate the right to carry firearms.
The worst cases of nastiness, will come from people’s anger over their own mistakes.
I can see such nastiness already brewing here and there, and property hasn’t collapsed (as yet). Many people have collapsed financially already, many have been for the past few years too. More to come.
Be wealthy, healthy, happy, and look boringly and plainly very average, or just slightly below average.
^ Just be average.
What makes me laugh is properties recently renovated…being renovated.
There is a nice little house down the end of my street in Northern Beaches, Sydney. 4 owners in 10 years. First couple did a great job on a place that hadn’t been touched in 30 years. The next 3 idiots just made my mind boggle. Why would you buy it to just to pour another $100,000 or so into it? Why does a front yard as large as my bathroom need “landscaping” every 2-3 years? Got to think these yuppies have borrowed heavily for this honour. The last sucker will be just that.
Betcha more has been spent on this cute house over 3650 days by a factor of 2 than its really worth in the first place.
Oh…iron ore $46.40. Lol.
@ Patrick
Funnily I noticed the same thing when I was working in Medindie Adelaide (one of the most expensive ‘burbs).
These are mostly old pollies and settlers mansions, many heritage listed. But the amount of work being done on these places was mind boggling: Constantly at least one house per street was having major work…..Why? It costs a fortune to buy in these suburbs, if the place aint right when you move in something is wrong.
we really have built a credit super cycle, where the sellers demands always get met. How often do you hear “Well, I bought it for $X, I invested $Y so I needs $(X+Y+15%)”… And some dumb loan slave ponies up the money. Insanity.
Has anyone tried selling anything on gumtree or ebay???? Do you have buyers asking ‘what do you need?’ and willingly paying it? Of course not, more likely buyers insult you with their low ball offers.
The Aussie Psyche is completely at odds with reality.
This can not end well at all.
No joke.Today,in Rozelle,I saw a black tank flashing blue lights with rubber tyres.What on earth is going on.Is this for terrorists or for WTSHTF when everybody wakes up broke.This tank was not army.Clearly on the sides,in upper case,POLICE.This Easter let us pray for love truth and peace for everyone.
Australia is in the headlines worldwide ….. for all the wrong reasons.
http://www.zerohedge.com/news/2015-04-02/australia-wants-tax-bank-deposits-will-us-follow
@Matty
Yep, housing is the only “commodity” where there is something called pseudo-auctions with those ludicrous “offers over $XXXXXXX” taglines. And buyers actually fall for that cr*p. It is indeed in the Australian Psyche because most real estate agents I’ve met are pretty hopeless at selling.
@ 56andoverit
Enjoy your Easter as the next step is drones (Perhaps armed)
During an interview with Frank Zappa he was asked who he thought would defend the country if not the army. He replied “From what” He went on to say “The biggest threat to America today is it’s own Federal Government. Will the army protect anybody from the FBI…the CIA …the IRS… the Republican Party … the Democratic Party. The biggest dangers we face don’t need to sneak past our billion dollar defence system … they issue contracts for them.
The interview was never published.
It is very clear to see the bankster are in charge of the government/country when they can publicly threaten the treasurer to fix the budget or else. Sort of like the Godfather telling Big Joe “We’ve got an offer you can’t refuse”
http://www.skynews.com.au/news/politics/national/2015/04/03/hockey-put-on-notice-over-credit-rating.html
Here in good old New South Wales, the recently re-elected Liberal state government is celebrating this property bubble madness (see link below).
So the whole NSW economy is reliant on slugging home buyers extortionate amounts of stamp duty for overpriced homes.
What other industries does NSW have, that actually creates real jobs, and not just make the government and banks rich?
The lunatics (ie, our useless politicians), are running the asylum.
http://www.smh.com.au/nsw/property-boom-raining-stamp-duty-on-relected-baird-government-20150403-1mdliq.html
Looks like the print media is ramping up its denial pleas. Love this beauty today, apparently Sydney property prices can’t crash, because they have never crashed before.
House price data bursts alarmists’ bubble
“House price figures compiled for The Weekend Australian show there has been no major crash in values since data began to be collected in 1965, with the most significant correction a 9 per cent dip in Sydney prices between March 2004 and December 2005.”
The concept goes, it doesn’t matter if say the median Sydney price was 1 trillion dollars, if it never happened before – it simply can’t happen.
It’s brilliant marketing – err, journalism.
I would argue the reason why it has never happened before, is we have never had a bubble this big before. When in history has Sydney prices gone up 39 per cent in two years, and how many times is this inflation?
Pete, it will be a “soft landing” – no problem!
We need more of this.
http://www.news.com.au/finance/real-estate/house-prices-tumble-at-the-coalface-with-some-now-on-the-market-for-less-than-land-value/story-fndbalka-1227290490188
@26 & 27 & 28 Aaaaaaarrrrrggggggghhhhhhhhhhh!!!!!!!!!!!!!!!!!!
Sorry, I had to get that off my chest.
Channel 10 news has just featured a report on our alarming household debt. They interviewed a few people if they were worried about their debt levels. One woman replied “No, it’s in real estate!”
Replace Canada with Australia
Bursting Bubbles – Short Canada?
http://www.bnn.ca/Video/player.aspx?vid=582499
…house prices don’t need to drop, they only need to plateau…
The huge corpse of RE bubble have attracted vultures, wolves, dingoes, crocodiles, files, etc. to the feast.
However, none of them is living on fresh meat. Through these greedy beings, the unknown virus is spread to other parts of the ecology in the isolated continent. OZ land is full of smell of the rottenness.
@ All Australians
I stand in front of the TV with my jaw on the ground while we see every man, woman, child and banker beg for more interest rate cuts.
Words completely fail me.
And yet the cheeky mongrels then say that the next cut will raise house prices by upto 7% in some areas!!!!!
Let’s get this straight:
Lowest rates on record……
House prices at all time highs, using any metric or ratio available…
Unemployment trending up…..
Huge government deficit…..(borrowing $100m per day, or about $4 per man, women and child…many of whom take home less than $100 per day)
NO SURPLUS’S IN THE 40 YEAR FORWARD PROJECTIONS…..
Terms of trade collapsing at record rates…..
No bottom in sight for iron ore price….
One of, if not the, highest personal debt in the world……
RMBS >>>> GDP
And house prices will rise several percent because of a 0.25% interest rate cut!
The world is truly mad. I have no words for the stupidity of Australian home buyers at this part of the cycle…. To buy now with any amount of leverage is complete suicide…… To do it for investment is complete madness, and you deserve to pay a debt until you die, it is pure greed to believe that housing is sustainable at any level.
I can see myself telling my grandkids in 2050 “Yes, they really did think that paying over 10times their income for an investment property was going to make them rich” and the reply will be “But pa! That doesn’t make any sense at all!”
It doesn’t make sense now (to me it didn’t make sense 10 years ago, I know cos I did the figures!) and it will look completely stupid in the future……
At least the tulip bubble smelt nice, not like musty old rentals.
Yep, the good folks over at Macrobusiness quite rightly call it The dumbest bubble in history.
And today folks we have a remake of the movie “Dumb and Dumber” staring Joe and Glenn with a 75% chance of a rate decrease by the RBA. The difference between this and the original is that it all ends in tears. The effects will be showing in a stock market or real estate near you. So roll up and get a front row seat to what will be biggest show on earth since the deflation of 1929. The cost to you will only be your savings, super and standard of living. So don’t miss out by leaving Oz, the best part is yet to come.
No such thing is conflict of interest for John McGrath:
http://news.domain.com.au/domain/real-estate-news/inside-the-complex-world-of-john-mcgrath-20150411-1mgmyh.html
With the sheer number of Australians caught up in the overpriced housing market with unsustainable mortgages, I find it hard to believe that in the event of the market taking a dive they will have much trouble. There will be government legislation and economic policy to bail them out. This is Australia where idiots never have to deal with the consequences of their actions. Reason shows they shouldn’t be doing it but this world doesn’t run on reason. I would love to see this all come down and the greedy making a loss, but it just wont happen that way. Banks made profits from the financial collapse. Why would this be any different?