The modern housing market is no longer driven purely by logic, affordability, or careful financial planning. In competitive real estate markets — and Ireland is now a textbook case — buyers are increasingly paying far more than they originally intended. What begins as a carefully calculated budget often turns into an emotionally driven bidding war fueled by fear, stress, scarcity, and competition.
This is not merely anecdotal. In October 2025, Ireland’s Economic and Social Research Institute (ESRI) published Buying and selling houses in Ireland: Behavioural economic evidence for reform, a study funded by the state’s Competition and Consumer Protection Commission (CCPC) and based on a nationally representative sample of 800 adults who completed a controlled auction experiment and a detailed survey (ESRI, 2025). The findings, which drew national coverage when released in February 2026, show that overbidding is not simply a financial issue. It is a psychological phenomenon shaped by market design, online bidding systems, housing shortages, and behavioral economics (RTÉ, 2026).
In today’s market, many buyers are not just purchasing homes. They are competing emotionally for stability and security — and to avoid being priced out entirely.
The Rise of Emotional Home Buying
In the ESRI’s controlled bidding experiment, participants in open auctions were significantly more likely to exceed their original budgets and to bid higher than they believed a property was actually worth (Irish Times, 2026). The effect scaled with how visible and competitive the format was: just over half of participants (54%) bid beyond their ideal budget in a sealed-bid auction, rising to 61% when bidding through an estate agent and 65% when using an online bidding platform (TheJournal.ie, 2026).
The ESRI’s Behavioural Research Unit linked this behavior to two well-documented psychological triggers:
- Auction fever — the drive to “win” once a person is inside a live competition, which raises emotional arousal and reduces rational decision-making.
- Loss aversion — the tendency for losses to feel more painful than equivalent gains, which makes buyers more motivated to avoid “losing” a property than to stay within budget.
As lead author Dr Deirdre Robertson explained, “Every time you’re the highest bidder and then someone outbids you, you’ve essentially lost your place — and that makes you more likely to increase your bid again, even if it means going beyond what you originally planned” (TheJournal.ie, 2026).
This creates a predictable emotional loop: another bidder enters, urgency rises, buyers fear regret, and rational price limits quietly disappear. The result is that homes sell above intended budgets — a pattern the ESRI attributes specifically to behavioral effects rather than supply and demand alone (TheJournal.ie, 2026).
It is worth noting that auction fever and loss aversion are only two of eight cognitive biases the ESRI identified as relevant to housing transactions. The others — anchoring, herding, extrapolation bias, present bias, ambiguity aversion, and the sunk-cost fallacy — compound the same tendency to overpay (ESRI, 2025).
How Bidding Systems Compare
One of the study’s most striking contributions is a direct, like-for-like comparison of how much each bidding system inflates final offers. Using a control condition (what participants thought a friend or family member should pay), the ESRI measured how far each format pushed bids above that neutral benchmark:
| Bidding system | Share who bid over their ideal budget | Average increase over the neutral benchmark |
| Sealed bid | 54% | ~€7,000 |
| Estate agent (open offer) | 61% | ~€13,500 |
| Online bidding platform | 65% | ~€16,000 |
Source: ESRI controlled auction experiment, 800 participants (TheJournal.ie, 2026; RTÉ report PDF, 2026).
Why Online Bidding Platforms Intensify Overpaying
Digital property platforms have transformed home buying into a real-time competitive experience. The ESRI found that around half of buyers expected a visible online bidding system would be fairer than the alternatives — yet the same online format produced the most inflated prices of any process tested (RTÉ, 2026).
The reason, the researchers suggest, is that visibility increases emotional pressure rather than dampening it. When buyers continuously see new bids, rising prices, competing participants, and countdown-style urgency, they begin reacting emotionally instead of strategically. Robertson noted that transparency may actually “extract a little bit more out of the bidders” precisely because they can be confident they are bidding against a real person (RTÉ, 2026).
This mirrors behavioral patterns seen in online auctions, gambling environments, and limited-stock e-commerce systems. The housing market is increasingly operating like a high-stakes live competition rather than a traditional transaction.
Buyers Are Stretching Beyond Financial Comfort
Affordability pressure makes the situation worse, and there is hard evidence that competitive bidding is pushing final prices well above list. A December 2025 report by property portal MyHome.ie found that two in five (40%) of homes sold in Ireland in 2024 closed at 10% or more above the original asking price, and one in seven transactions settled at 20% or more above asking (TheJournal.ie, 2025).
At the same time, supply shortages continue to intensify competition, and asking prices themselves have become unreliable as a guide. As property commentator Ciarán Mulqueen observed in The Irish Times, it has “become the norm now for buyers to assume that every home will sell well above asking price,” with low guide prices sometimes used to stimulate a bidding war (Irish Times, 2026). This kind of pricing strategy can create an artificial affordability perception early in the process, encouraging emotional attachment before the true market price emerges.
In this environment, buyers begin thinking in survival terms — “If I lose this home, I may not get another chance,” “Prices may rise even more next month,” “Rent is already unaffordable,” “Everyone else is bidding higher too.” These pressures gradually normalize overpaying behavior.
Stress Is Becoming a Core Part of the Buying Process
The emotional cost of modern home buying is increasingly measurable. The ESRI survey found that two-thirds of people who had previously bought a property in Ireland experienced at least one “transactional stressor” during the process — and among those who bought within the past three years, that figure rose to 84% (Irish Times, 2026; RTÉ report PDF, 2026).
Stress factors included bidding pressure, affordability fears, legal confusion, delays, uncertainty, and lack of transparency. Delays were the single most common problem: 34.8% of second-hand buyers reported that conveyancing took longer than expected, while 27% of new-build buyers experienced a delay moving in (McCarthy + Co Solicitors, 2026; RTÉ report PDF, 2026). Conveyancing delays were also the most common stressor reported by sellers (RTÉ, 2026).
Compounding the stress is a widespread misunderstanding of buyers’ basic legal rights. The ESRI knowledge quiz found that only one in five participants knew that an agent can legally continue marketing a property after it goes “sale agreed,” and fewer than half knew that a buyer can withdraw before contracts are signed without penalty (Irish Times, 2026; RTÉ report PDF, 2026). This lack of clarity increases anxiety and weakens buyer confidence throughout the transaction.
Myth vs. fact: what Irish buyers get wrong
| Common assumption | What the ESRI evidence shows |
| “Once I’m sale agreed, the agent stops marketing the home.” | Only one in five buyers knew agents can legally keep marketing after sale agreed. |
| “I’m locked in once my offer is accepted.” | Fewer than half knew a buyer can withdraw without penalty before contracts are signed. |
| “A seller can hold multiple deposits at once.” | Over two-thirds correctly knew this is illegal — the one area of relatively strong buyer knowledge. |
Source: ESRI knowledge survey, 2025 (RTÉ report PDF, 2026).
The Trust Problem: Ghost Bidding and Opaque Pricing
Trust and transparency problems are quietly becoming central housing issues. The ESRI found that 14% of buyers suspected they had been the victim of “ghost bidding” — the illegal practice of inventing fake bids to drive up a price — during their own purchase. More strikingly, one in three prospective buyers who had not yet entered the market expected to encounter ghost bidding (Irish Times, 2026).
A separate CCPC survey underlines how deep the transparency deficit runs: just 16% of consumers felt the current system is transparent for buyers (CCPC, 2025). When buyers do not trust pricing accuracy, listing strategies, bidding transparency, or transaction timelines, they become more emotionally reactive. Uncertainty creates urgency; urgency drives impulsive decisions; and impulsive decisions lead to overpaying.
Institutional and State Competition Are Increasing Buyer Pressure
Another force affecting buyer psychology is institutional competition — though this is an area of expert analysis rather than experimental finding, and should be read as such. In a widely discussed Irish Times column, economist David McWilliams argued that the State has become a dominant buyer in the new-homes market, with large volumes of new housing sold directly to state agencies through “forward sales agreements” in which an entire development is bought before construction is complete (HOMS Assist summary, 2025).
McWilliams contends that, rather than negotiating prices down as a bulk buyer normally would, the State’s urgency to add stock leads it to pay premium prices — setting a high benchmark that squeezes out first-time buyers (HOMS Assist summary, 2025). The emotional effect is powerful: buyers feel they are competing not only against other families but against institutions with far greater financial power. For buyers who hold mortgage approval yet still cannot find an affordable home, that disconnect intensifies frustration — and increases the likelihood of emotionally driven overbidding once an opportunity finally appears.
Scarcity Is Rewiring Buyer Psychology
Housing scarcity changes behavior. When inventory becomes severely limited, buyers stop evaluating homes solely on value and begin evaluating them on the fear of future exclusion. That shift shows up throughout the Irish data: homes routinely selling above asking price (TheJournal.ie, 2025), a documented decline in trust and transparency (CCPC, 2025), and growing affordability pressure. The market no longer feels predictable or merit-based for many buyers; instead it increasingly feels survival-driven.
Why Overbidding May Continue Rising
Several long-term trends suggest overbidding behavior may persist:
- Limited housing supply — inventory shortages remain severe across many regions.
- Digital competition — online bidding systems increase emotional engagement and visibility, and produced the largest price inflation in the ESRI experiment.
- Affordability anxiety — buyers fear permanent exclusion from homeownership.
- Institutional competition — state-backed and institutional purchases reduce public availability, according to expert analysis.
- Behavioral triggers — auction environments naturally activate emotional decision-making across all eight biases the ESRI identified.
Combined, these factors create conditions in which rational budgeting becomes increasingly difficult.
Frequently Asked Questions
Why do so many Irish homes sell above the asking price?
A combination of low supply, competitive open bidding, and pricing strategies that set guide prices low to stimulate interest. MyHome.ie found 40% of 2024 sales closed at least 10% above asking (TheJournal.ie, 2025).
Is online bidding actually fairer?
Buyers tend to believe so, but the ESRI experiment found online platforms produced the highest overbidding — around €16,000 above a neutral benchmark, versus ~€7,000 for sealed bids (TheJournal.ie, 2026).
What is “auction fever”?
A behavioral pattern in which the drive to win a live competition raises emotional arousal and pushes bidders past their planned limits (RTÉ, 2026).
Can a buyer walk away after going “sale agreed”?
Yes — in Ireland either party can generally withdraw without penalty before contracts are signed, though fewer than half of buyers surveyed knew this (RTÉ report PDF, 2026).
Final Thoughts
Overbidding is often discussed as a pricing issue. But the deeper reality is psychological. Today’s buyers operate inside a system shaped by scarcity, competition, uncertainty, emotional pressure, rising costs, and digital bidding dynamics. The evidence from Ireland suggests that many people no longer buy homes according to carefully planned financial limits — they buy according to the fear of missing out, the fear of future price increases, and the fear of losing stability altogether. Unless the underlying system is reformed to reduce these behavioral triggers, that psychological pressure may become one of the defining forces shaping modern real estate markets in the years ahead.
Sources
HOMS Assist (summarising David McWilliams, The Irish Times) — “Why First-Time Buyers in Ireland Can’t Buy New Homes” (12 November 2025). https://homsassist.ie/news/why-cant-first-time-buyers-purchase-new-homes/
Economic and Social Research Institute (ESRI) — Buying and selling houses in Ireland: Behavioural economic evidence for reform (2025). Authors: Pete Lunn, Adam Joachim Shier, Cameron Belton, Féidhlim McGowan. https://www.esri.ie/publications/buying-and-selling-houses-in-ireland-behavioural-economic-evidence-for-reform
ESRI / RTÉ (full report PDF) — Behavioural evidence on bidding systems, stressors and market functioning (2026). https://www.rte.ie/documents/news/2026/02/property.pdf
Competition and Consumer Protection Commission (CCPC) — Room for Improvement: Homebuying Research Report (2025). https://www.ccpc.ie/business/wp-content/uploads/sites/3/2025/07/CCPC-Homebuying-Research-Report.pdf
RTÉ News — “Home-buying process leads to overbidding, delays – ESRI” (9 February 2026). https://www.rte.ie/news/business/2026/0209/1557385-esri-home-buying/
The Irish Times — “Ireland’s bidding system for homes ‘driving prices higher'” (9 February 2026). https://www.irishtimes.com/business/2026/02/09/irelands-bidding-system-for-homes-driving-prices-higher/
The Irish Times — “Explainer: One big reason why Ireland’s home-buying process is so fraught” (9 February 2026). https://www.irishtimes.com/business/2026/02/09/explainer-one-big-reason-why-irelands-home-buying-process-is-so-fraught/
The Irish Times — “When one-third of Irish homebuyers expect to be ripped off, it’s a big problem” (11 February 2026). https://www.irishtimes.com/business/2026/02/11/it-is-a-big-problem-when-one-third-of-homebuyers-expect-to-be-ripped-off/
The Irish Times (Opinion, Ciarán Mulqueen) — “You have more transparency buying a steak in Ireland than you do a home” (15 February 2026). https://www.irishtimes.com/opinion/2026/02/15/ciaran-mulqueen-you-have-more-transparency-buying-a-steak-in-ireland-than-you-do-a-home/
TheJournal.ie — “‘Auction fever’ leading some Irish homebuyers to bid more” (9 February 2026). https://www.thejournal.ie/online-bidding-houses-prices-6949488-Feb2026/
TheJournal.ie — “Two-in-five homes sold at 10% or more above asking price” (MyHome.ie data, 8 December 2025). https://www.thejournal.ie/one-in-five-home-buying-transactions-settled-at-10-or-more-above-asking-price-6896559-Dec2025/
McCarthy + Co Solicitors — “Conveyancing Delays Drive Homebuyer Stress, ESRI Finds” (12 February 2026). https://mccarthy.ie/blog/house-purchase-sales/conveyancing-delays-drive-homebuyer-stress-esri-finds/