Fear drives human behaviour more than greed

Singapore's real estate market has been pretty resilient thus far. Just when the financial crisis is barely over, investors are running head over heels for apartments once again. This time the prices have broken through previous highs and there are even signs of speculation as well.

I would say that the outlook for Singapore's real estate still remains bright for the long term future. However, very much like the equity markets, I think prices have gone ahead of itself. I was pondering about what could have been the key driving factor. What was it that really pushed people through the line to place hundreds of thousands and sometimes even millions betting on real estate? After some thoughts, I find that the answer is more psychological than rational.

I am inclined to believe that it is fear. The fear that when prices skyrocket, people are afraid that they can no longer afford to buy such houses in the future. They are afraid that they would be left behind as they missed the great bullish bandwagon.

As for greed, sure there are people who are in it to make a quick buck. However, emotionally speaking, what human beings really can't stand is the sight of their peers faring better than them. We despise and look down on people around us, thinking that we are all high and mighty. The sight of someone inferior making more money than we are pushes us to take uncharacteristic actions. I see this all the time and I find it to be a far more convincing reason than greed alone.

The world is way more chaotic than one can imagine. I wouldn't dare say that people who jump in right now aren't making an astute decision. When governments of the world are undertaking the path of least resistance, implementing massive fiscal and monetary stimulus. They try their very best to inflate away the troubles with paper money. Though we might not see the effects right now due to rampant deflationary pressures, we might witness later on the future when true recovery comes.

However, I have experienced my own fare share of setbacks to declare anything about the future. I have seen my own opinions gone wrong on more occasions than I can count.