‘Auction fever’: Irish housing market characterised by overbidding

By Cillian Sherlock, Press Association

Overbidding, a widespread misunderstanding of rights, and increasing delays are all characterisations of homebuying in Ireland, according to a new study.

The report published on Monday finds that the most commonly used bidding systems encourage people to overbid, leading to inflated prices.

The Economic and Social Research Institute (ESRI) has conducted a behavioural science experiment examining the impacts of “auction fever” on the decision making of Irish homebuyers.

Researchers put hundreds of homeowners and prospective buyers through simulations of different types of bidding processes in Ireland and elsewhere to see how they influence behaviours.

Participants’ bids were pushed higher in “open auctions”, such as through estate agents and online platforms, than in a sealed bid auction.

Those in open auctions were more likely both to exceed their original budget and to bid higher than their view of what the property was worth.

As bidding systems that involved open competition led to higher prices, the researchers said this aligns with behavioural theories on “auction fever” and “loss aversion”, which suggest that competitive environments drive individuals to try to beat others and that people feel losses more than equivalent gains.

While participants said they favoured the transparency of online systems due to the perception of fairness, their behaviour in auctions suggests that open systems may actually push up prices.

ESRI senior research officer Dr Deirdre Robertson said the report shows buyers are “navigating a system they may not fully understand and increasingly experiencing stress”.

A survey of participants also revealed that knowledge of rights and responsibilities is low, with widespread misconceptions about legal obligations and protections.

While more than two-thirds know it is illegal for a seller to accept multiple deposits for the same property, only one in five know that agents can legally continue to market a property after it goes “sale agreed”.

Additionally, most people do not know that a buyer can pull out of a sale without penalty before contracts are signed.

The study was funded by the Competition and Consumer Protection Commission (CCPC), which has previously recommended reforms around simplifying and increasing transparency in the conveyancing process including legislating for pre-sale requirements and the full disclosure of information on property platforms.

It’s very important for homebuyers to exercise caution when approaching any type of auction.Simon Barry, CCPC

The CCPC’s 2025 report in the residential property market also found low trust and transparency in the homebuying process.

Simon Barry, director of research, advocacy and international at CCPC said the study reconfirms the need for reform and greater financial literacy.

Warning that mistakes and delays can be costly, he added: “It’s very important for homebuyers to exercise caution when approaching any type of auction.

“Buyers need to understand the bidding system they are participating in to ensure they make the right financial choice and stick to their intended budget for what is likely to be one of the biggest purchases they’ll ever make.”

While the majority (63 per cent) of people who previously bought a property in Ireland experienced at least one type of stressful hurdle during the process, the figure rose to over 80 per cent among those who bought in the last three years, with the most common issues relating to delays.

Most participants also want sellers to provide a condition survey rather than buyers.