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Is it just me, but is the news today that house prices have fallen ’sharply’are ‘turning down’ a self-fulfilling media prophecy, along the same line as the run on Northern Rock not so long ago.

Also, why is a monthly -0.8% drop, but an annual rise of 6.9% considered a ’sharp tumble’? That’s the BBC speaking, not me (Update: I see the Beeb has seen the error of it’s ways, and rephrased the article. More at end of post.). Sure things have to turn at some point, but let’s keep things in perspective… an average £100,000 house (goodness knows where, but it’s a nice round figure for arguments sake) last year is still worth an extra £6,900.

We’ve had years of angst and hand-wringing by over indebted and reactionary Daily Mail readers about the looming property market crash. The rises have clearly gone on for too long, such that buying houses are out of the reach of far too many people. But does it have to be a crash? The rises are more a function of a growing economy, increasing demand, and the wrong sort of new houses being built, and even when they do build them, cookie cut houses rather than anything genuinely interesting. Small falls in prices aren’t necessarily a bad thing if they make houses more affordable. The infamous ‘cooling’, I suppose.

But the media, and especially the BBC right now, seem keen to latch on to and push every bit of bad news, because it’s such a politically hot potato (Like Mr Brown needs another. If the public feels ‘poorer’, and blame him, he’s going to be in real trouble). By latching on to the story and featuring it rather prominently. Case in point is their infuriating business editor Robert Peston (who badly needs some elocution/presentation lessons to reduce his distracting lilt that is, in my view, very badly suited to broadcast media; It also detracts from his (usually) solid reporting) on Radio 4’s Today, this morning, who said, and I quote:

In October … before the impact of the credit conditions… there was quite a sharp fall in house prices, so what I would extrapolate from all of this, that there is a risk that this fall in house prices could continue, don’t know for long but it could turn out to be for quite a long time and it could turn out to be quite severe.

I love it when the press turn to forecasting rather than simply reporting facts. Nice to get some emotion in the whole thing.

Back to my point - remember the Northern Rock issue - it’s the same thing as here (and indeed was originally broken by Peston). The BBC reported the problems at Northern Rock: A few people figured they’d go get their money out. The BBC reported a few queues. People see the queues on the TV. SO more people start panicking (frequently denying they were doing just that as they joined the very queues). The cycle repeats. Add the big dab of Government faffing over the course of a few days which didn’t help matters, but the media feedback loop exacerbated the problem and was something quite scary to behold.

With the housing price indicators fall - The market is always a bit slow this time of year (who wants to move before christmas?), so I would expect that reduced volume will increase volatility, and the credit market is a strange place right now. So why the need to report this issue so prominently?

A small drop really should be nothing to get worried about (remember, they’re up over the course of a year), and could be reported as such, but the use of strongly emotive and exaggerated vernacular (’severe’ and ‘tumble’ and ‘a long time’) just doesn’t help keep any sense of balance and serves to affect the issue they’re trying to report on.

It serves only to exaggerate and build emotion, precisely what the BBC shouldn’t be doing.

Update 12:46pm :: The BBC appears to have rephrased the title and spirit of their article. The market is now ‘turning down’ (in quotes, but who from I can’t tell in their article). I wonder if Mr Peston will also be more restrained in later bulletins?