Buffer-aided relaying can considerably increase the reliability of wireless networks. In this paper, we propose a max-link relay selection method with physical layer network coding for wireless two-way relay systems. We derive closed form expression for outage probability both in unlimited and limited buffer size scenarios. Also, we introduce the novel term of relative diversity gain to compare relative advantage of buffer-aided relaying to conventional relaying. Numerical results show that the proposed method achieves better outage performance even with buffer size as small as 2, and reaches diversity gain two times of the number of relays for large buffer sizes.