<\/p>\n
Buyers are staying on the sideline as markets stall. Picture: Glenn Campbell<\/p>\n
ANALYSIS<\/p>\n
In TV\u2019s greatest sitcom Seinfeld, there is an episode where unlucky-in-life character George Costanza has an epiphany. To turn his fortunes around, he should do the opposite of what his instincts tell him to do in every situation.<\/p>\n
Immediately, the plan gets results. He scores a dream job, begins attracting women and is able to move out of his parents\u2019 home.<\/p>\n
In the real estate world, and in other investment fields, it can also pay to act in a different way to the accepted norm. It\u2019s how the world\u2019s great investors, like Warren Buffett, have made their fortune.<\/p>\n
The key is not to be swept up in market sentiment, but rather use it to your advantage.<\/p>\n
See, market sentiment can be the difference between striking it rich or breaking the bank when it comes to buying property.<\/p>\n
MORE:Albo land sell-off sparks big fears<\/a><\/p>\n Whether house prices are rising or falling, sentiment can amplify a minor data trend into a full blown boom or bust.<\/p>\n Auction clearance rates have plummeted since the budget tax changes. Picture: Damian Shaw<\/p>\n A 1 per cent house price rise may push a $1 million home up by $10,000 in value on paper, but if that home goes to auction in a strong seller\u2019s market, with 10 enthusiastic bidders, the difference can be hundreds of thousands of dollars.<\/p>\n The same is true in reverse.<\/p>\n Now that markets have stalled across the nation, values have begun to decline. The falls are relatively minor, for the most part, but market sentiment amplifies them.<\/p>\n A 0.5 per cent monthly fall in Sydney and Perth (according to PropTrack\u2019s latest Home Price Index) turns into a 6 per cent annual decline if the trend continues.<\/p>\n And while the trend does continue, market sentiment exaggerates the effects to make it sound as if the sky is falling.<\/p>\n MORE: Sellers ditch auctions as panic sets in<\/a><\/p>\n Auction clearance rates are at rock bottom as buyers bail out of the market, kept away by rising interest rates, falling borrowing power, global economic uncertainty and, of course, the federal government\u2019s much-discussed and oft-maligned tax changes for investors.<\/p>\n Property listings are up 6 per cent year on year according to SQM Research, as more people look to sell for one reason or another.<\/p>\n It is clearly a buyer\u2019s market, but there appears to be a shortage of buyers who either can or will make the most of it.<\/p>\n It represents a great opportunity for those who can, as property cycles have moved the same way for a long time. A growth surge, followed by a plateau, a small fall in values, a recovery to the previous peak and finally the next growth surge.<\/p>\n We have entered a correction phase and, like the others before it, it is likely not to last too long.<\/p>\n<\/p>\n