Friday 18 January 2019

RTE broadcasts fear in the market

Alan Ruddock

RTE did its bit on Monday night to kill the property market. And, if its own logic is correct, kill the economy too. Set to a soundtrack of gloom, Futureshock told us we were doomed. There were some caveats, but the message was relentless: the Irish property market, which has enjoyed a spectacular boom, is now stagnant.

Soon, very soon, it could crash. When it does, the nightmare of negative equity will stalk the land. People will be trapped, living in houses that they cannot afford to sell because they have lost so much in value, yet saddled with mortgage repayments that they can no longer meet because interest rates have risen so sharply. With unemployment doubling in a year, they may even have lost their jobs.

The crisis will become self-feeding - the death of the economy propelling the property crash while the crash itself triggers greater economic decline. Soon, like one of the tragic victims of the British property collapse of the early Nineties, you could find yourself with a brain tumour as the stress of losing your home sends you to the morgue.

Anyone who had just bought a property would have struggled to sleep on Monday night: had they just made the biggest mistake of their lives? And anyone thinking about buying would have telephoned their estate agent first thing on Tuesday morning and cancelled the deal.

Futureshock was determined to terrify its viewers, and it did. In today's IMS opinion poll, which was conducted on Monday and Tuesday last week before, during and after the programme, 49 per cent of those surveyed believed that house prices would now fall: the number who think they will fall a little has almost trebled since September to 37 per cent, while the number who think that prices will fall a lot has shot up sixfold to 12 per cent.

The figures reveal a collapse in confidence in just over six months. In those far-away, carefree days 73 per cent of us believed that property prices would rise either a lot (33 per cent) or a little (40 per cent) over the next year. Only 16 per cent believed that prices might fall either a lot or a little.

Since then the market has been stalled by the uncertainty over stamp duty reform, by the impact of rising interest rates and the prospect of more to come and by news of high-profile job losses. Confidence has been severely dented, and as Richard Curran, who wrote and presented Futureshock, told us, property prices are driven by emotion. And therein lies the programme's perversity and RTE's irresponsibility.

Television's power is well known, and that power increases when it comes with the imprimatur of the State. By devoting an hour of prime-time television to a programme based on fear, RTE was indulging in self-fulfilling prophecy.

Curran's basic thesis is a reasonable one: if the economy does, indeed, implode because of some external shock (he cites the rapidly weakening dollar as a likely trigger) then the property market will of course collapse. Because so much of our economy - about a quarter - depends on the construction industry, the two will feed off each other.

It is a risk, but how real a risk, and how imminent a risk? And if, as Curran told us, all property booms end in crashes, how does Ireland's boom equate to previous booms in other countries? Were the factors behind the price rises all the same? Did other countries experience similar booms, delivering growth rates that killed off unemployment and sucked in hundreds of thousands of foreign workers? Did other countries have a huge imbalance between the supply of houses and the demand for them? Futureshock brushed that to one side and ploughed on with the obvious - that economic turmoil would bring prices crashing down, and that all booms end in crashes.

Investors who have bought 40 per cent of new homes will be left with massive losses as foreign workers desert our shores. Families could be thrown out on to the street. Worst hit will be those who bought at the height of the boom in 2006.

Curran revelled in the gloom. He imagined future news clips chronicling the disaster, he flashed up budget day-style graphics that showed how much different categories of owners would lose, he interviewed victims of the British crash, and directed the blame at the 'vested interests' who keep the market alive by hyping it when they know it is a busted flush. We should be alarmed that two estate agents have sold out at the top of the boom and alarmed, too, that the banks are selling property while encouraging us to buy.

Balance was not an issue, because the programme's aim was to provoke and to be a counterpoint. Curran was exploring a nightmare scenario and highlighting risks, but the validity of the exercise was stripped away by its presentation and its programming.

Instead of being a sane and salutary warning that prices fall as well as rise, that property booms end and that a crash is a possibility, it became an exercise in fear endorsed and promoted by the national broadcaster.

If it had been broadcast a year ago, when confidence was high and prices rising, its message would have been unchanged but its impact would have been less shocking. The same external threats existed then as now - if the dollar rises to 1.75 against the euro, we really will have problems, and if interest rates keep rising here that will make it even worse, because each rate rise will potentially make the euro even stronger - but the key difference was that confidence was high, not shattered.

By broadcasting fear into an already stagnant market, RTE ensured that the message would have maximum negative impact. By giving it the look and feel of a current affairs programme, it chose to give Futureshock enhanced credibility. And as Curran told us, sentiment is everything.

That sentiment will take a further battering in the coming weeks now that Bertie Ahern, the Taoiseach, has indicated that he is also in favour of reforming stamp duty as soon as the new Dail gathers. Why buy a house now if by waiting just two months you can avoid or significantly reduce the transaction tax you must pay to the Government?

Stagnation feeds uncertainty and there will be stories of unsold houses, of prices falling, of repossessions and individual tragedies because all of us in the media know the power of fear and exploit it. As Lex Luthor, the comic book villain, says in Superman IV, "The more fear you make, the more loot you take."

Futureshock was built on that fear, and RTE ruthlessly exploited it. It was not public service broadcasting, it was a cheap pitch for controversy and ratings, and it was perversely irresponsible.

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