The media in the UK are like a pack of hungry circling sharks when they smell a juicy trend. The merest hint of news in the air and they are all over it, tearing it into tiny pieces.
They did this of course during the previous period of non-inflationary growth that we had in the UK. Our TV screens were full of programs about how to buy houses cheaply, renovate them and sell them for a profit. Full of programs about how to make money from housing development. hardly surprising then that everyone feels they must jump on these bandwagons or risk being left behind.
There is little doubt that we would have seen significant rises in house prices regardless of such frenzied media activity but it is doubtful if the property rises we saw in recent years would have been so significant. The way they report such trends tends to amplify the very trends that they are reporting.
We are seeing the same process in reverse at the moment. Beginning with sub-prime in the US we had problems in the banking sector that resulted in a very significant tightening of credit. So far so real. But of course for the media it is important to be the first one with the big headline. If your competitor has a headline predicting 10 % falls in house prices you are not going to get more viewers or readers with a headline that says " No need to panic - falls will probably only be 5%". No. You need a more attention grabbing headline. So you go for something like " Bottom falls out of Housing market - falls may reach 25%" and you find some pundit somewhere who will agree with this.
Markets are built fundamentally on sentiment. If people believe that a market is going to be stable or even rise then they are likely to be willing to buy. If they think a market is due for significant and sustained falls then they will defer their purchasing in the hope of getting a better price later. So the media cannot disclaim responsibility for the impact of the way they choose to report economic problems.
This is off course not to argue that they should pretend everything is fine and that there are no problems. But they do have a responsibility not to engage in a feeding frenzy which magnifies trends. At the moment the UK media show no signs of taking this responsibility seriously.