Irish House Prices: Bidding Wars, Overspending & Buyer Frustration

The Irish housing market is increasingly characterized by intense bidding wars, pushing prices far beyond initial valuations and leaving prospective buyers feeling disheartened and financially stretched. A confluence of factors, including limited supply and competitive auction dynamics, is driving this trend, raising concerns about affordability and fairness within the system.

Recent experiences, such as that of Yvonne Healy in Tallaght, south Dublin, illustrate the current reality. After placing her first bid on a property with an asking price of €360,000, Healy found herself quickly exceeding her budget by nearly €30,000 within 30 minutes. Bids ultimately climbed to €414,000, prompting her to withdraw from the process. “It’s opened my eyes at just how disheartening this process is possibly going to be for us,” she stated, expressing a growing sense of pessimism about her prospects of homeownership.

Healy’s experience is not isolated. Numerous buyers report similar scenarios, with properties frequently selling for significantly more than the asking price after weeks of online bidding. This phenomenon is fueled, in part, by the ease of participation in online bidding platforms, which, while offering transparency, can also exacerbate competitive pressures.

Research from the Economic and Social Research Institute (ESRI) supports these anecdotal accounts. A study published earlier this week found that buyers participating in auctions are more likely to exceed their original budget and bid higher than their assessment of a property’s true worth. The ESRI’s behavioral science experiment revealed that open auctions, such as those conducted through estate agents and online platforms, tend to drive prices higher than sealed-bid auctions.

The study points to “auction fever” and “loss aversion” as key psychological drivers. Competitive environments encourage individuals to outbid each other and the fear of losing out can lead to irrational decision-making. While participants generally favor the transparency of online systems, the ESRI’s findings suggest that this transparency may inadvertently contribute to inflated prices.

Concerns also exist regarding the potential for unfair practices, such as “ghost bidding,” where fictitious bids are submitted to artificially inflate the price. While estate agents maintain that online platforms offer stronger safeguards against this practice than traditional methods, a survey conducted as part of the ESRI study revealed that 14% of buyers suspect ghost bidding occurred in their experience, signaling a “lack of trust” in the process.

Meg Malone, a recent homeowner in Baldoyle, Dublin, described a “long and painful” search, involving over 80 viewings and being outbid on 15 properties. She ultimately secured a home for €30,000 over the asking price of €425,000, a relatively modest increase compared to some other cases. “It was a soul-destroying process,” she said, “and we still pinch ourselves that we came out the other side.”

Elizabeth Surgeon’s experience highlights the desperation felt by some buyers. After selling her home in Inchicore, Dublin, she and her family were forced to move in with her mother while searching for an upgrade. They were compelled to withdraw from a bidding competition when a property reached €80,000 over its €495,000 asking price, after being told by an estate agent that a bid of €600,000 “might take it off the market.”

Estate agents acknowledge the intensity of the market but attribute it primarily to a severe shortage of housing supply. Marian Finnegan, chief executive of Sherry FitzGerald, argues that online platforms are favored for their transparency and that the industry is “heavily regulated” by the Property Services Regulatory Authority (PSRA). The PSRA has stated it is reviewing the ESRI report’s findings.

DNG’s deputy chief executive, Orla McMorrow, disputes the ESRI’s finding that online bidding leads to overpayment, asserting that buyers are paying more due to the limited availability of properties. Bobby Geraghty, director of Hunters Estate Agent, echoes this sentiment, stating that buyers now “almost expect to be paying in excess of the asking price” due to basic economic principles of supply and demand.

The current situation underscores the fundamental imbalance between housing supply and demand in Ireland. While online bidding platforms may offer some benefits in terms of transparency, they also appear to exacerbate competitive pressures and contribute to a system where affordability is increasingly out of reach for many prospective homebuyers. The ESRI’s research suggests a need for a critical examination of existing bidding practices and potential reforms to ensure a fairer and more sustainable housing market.