Don't follow the herd when buying property

One of my favourite investment philosophies comes from a statement made by the great Warren Buffett that states, “Be fearful when others are greedy and greedy when others are fearful”. 

Typically, when the residential property market has been riding high and strong, many amateur investors and buyers for primary residence follow the herd with hopes not to miss out on the buying frenzy. It feels absolutely safe and normal to buy when everyone is buying, the timing seems just perfect. Do people ever stop to consider whether prices are inflated with such a growing increase in demand – is the market timing really that perfect? 

Last year proved to be a very interesting year for the real estate market across Sydney. There was a general lack of uncertainty floating in the air, which over time became uncomfortable. There was constant speculation of the world ending and the Sydney market collapsing.

This ultimately created a general lack of confidence, which affected the real estate market dramatically. This all in hindsight lead to a significant decrease in buyer activity and demand. All of a sudden, people were reluctant to buy as it did not feel safe to play ball in a market that was no longer competitive.

It was fascinating, while the market was dropping in value, in several eastern suburbs areas between 10% and 20%, it was like people in a position to buy were waiting for the herd to return to give them back their boost of confidence. It was the savvy buyers who became greedy and could sense the fear that were able to capitalise on the excellent buying opportunities. 

This year presents an exciting year with great opportunity for property buyers. It appears buyers again are sitting in the front seat with more control. 

Is it the year to become greedy or are you going to follow the herd?

Ben Handler is a Sydney-based entrepreneur. Ben is the co-founder and director of CohenHandler - an exclusive buyers agency in Double Bay, Sydney. CohenHandler is one of Sydney's leading buyers' agencies since inception only two years ago. Ben is a buyer specialist in the eastern suburbs, being involved in residential transactions up to $15 million.