As a homeowner and as a prelude to Halloween, (in seven days’ time), do you want to be scared to the bone? If so, read on and discover that house prices are falling at $1,000 a week in Sydney and Melbourne!
Yep, that’s what the ABC told me about the views of Deloitte Access’s Chris Richardson’s take on the house price pickle we’re in right now.
Not surprisingly, the national broadcaster came up with the predictable headline on its website that read: “House prices 'falling by over $1,000 a week' in Sydney and Melbourne, Deloitte says!” That’s my exclamation mark and that was the effect that the sub-editor wanted — fear was the emotion he or she was using to suck in people like me. The question is: Did the headline impart the truthful view of Richo as a respected economist?
Also, did Deloitte (as a respected organisation known for doing the numbers as an accounting business) like the fact that the headline could have negative effects on consumer confidence and then the economy?
Oh yeah, on that subject, the consumer is getting scared! This is what a CommSec media release told us: “Biggest fall in consumer confidence in 6 years!” Yes, that’s my exclamation mark again but this time it’s deserved.
Craig James searched for the reason for the ANZ-Roy Morgan consumer confidence rating falling 6% to 112.3 in the past week, the largest fall since the week ended 20 May 2012. And the index is below the average of 114.2, held since 2014 and below the longer-term average of 113 held since 1990!
I have to say weekly readings can be too jumpy to be confident about these confidence readings and to make the point: “the week before last, sentiment was the best since July and consumer views about the state of their finances was at the highest level for over nine months,” Craig pointed out.
So what has changed? Remember, different consumers can be scared about different things but here are the factors that could explain it:
• The Wentworth by-election result and the fact that we now have a minority Government.
• The threat of another election, which might come sooner than the one expected in late May.
• Petrol prices are now at the highest level in a decade, which has to be scaring households on tight budgets.
• The stock market is pretty negative and crazy right now, with the S&P/ASX 200 index down over 6% in October.
• Since APRA and the Royal Commission has bounced the banks, it’s harder to get money if you want to buy a house.
• Headline talk about rising interest rates.
• There is also the persistent media, Halloween-like haranguing about our house prices heading south faster than Malcolm Turnbull’s popularity within the Liberal Party!
• And you could argue that the Wentworth by-election could make all those Aussies, who see a future PM Bill Shorten as the Freddie Kruger in their Nightmare on ‘Struggle’ Street, a little spooked right now. These would include retirees receiving dividend-related tax refunds, property investors and home owners, who fear lower house prices under Labor. (These could be exaggerated issues but, right now, lots of these people could be alarmed about their future.)
The reaction of consumers in one week is astounding and it might say something about the dodgy numbers this stat has produced. So I look forward to seeing next week’s figures. However, the willingness of the media to make a bad story even worse or scarier can’t be left out of the explanation of why consumers have future fright!
Let’s go back to the ABC/Richo story and the ‘fact’ that house prices are falling at $1,000 a week. Where did that come from?
I promise to find out for sure, as I have Chris on my TV show next Monday. I guess you’d take the median house price in say Sydney, work out the fall in the median price since prices fell and then divide that number by the weeks since they’ve been falling. And hey presto, a great, scary headline shows up, in round numbers no less!
But what’s really got me unsettled about this ABC take on Richo’s story is other revelations that did not qualify to be the headline, such as:
• “Mr Richardson said normally a drop in house prices could damage the economy, but in this case the indicators were that the fall was mild and Australia's economic growth continued to accelerate.”
• “While falling house prices might mean owners are losing out on paper, there is also good news on the horizon: better wage growth.”
I have to say media outlets did cover Richo’s less scary story but that’s because his credibility can’t be ignored but he still warranted to be linked to a silly, scary headline about house prices falling by $1,000 a week. It’s possible Chris fed that to the media and they jumped on it, like a Labrador pouncing on a sausage that hits the ground at a backyard barbecue!
All this media, over-amplified negativity, which could hurt confidence, spending, business investment, job creation and economic growth can’t be allowed to continue without checking.
Between now and May, PM Morrison and Treasurer Josh Frydenberg have to step up and start fighting stupid, crazy headlines like the way Paul Keating, Bob Hawke, Peter Costello and John Howard did.
They took on sensationalist journalists and conniving media outlets that played fast and loose with the economic truth to sell newspapers or to attract ears and eyes.
It was great TV and radio in those days and the fight was worth it for those politicians. It not only helped the economy, it cemented their role as being important to everyone’s material lives. The Wentworth by-election screamed out loud that voters are tired on second-rate, uninspiring politicians and that consumer confidence number kind of reinforces this view.
Like him or not, one thing you have to say about Shorten is that he is standing for something. As a consequence, he’s looking more convincing than his rivals.