Buying and selling property in Ireland: Behavioural evidence on bidding systems, stressors and market comprehension

This report investigates how the Irish housing transaction system influences buyer and seller behaviour. Drawing on behavioural science, it explores how cognitive biases, including auction fever, loss aversion and ambiguity aversion, may be exacerbated by features of the Irish market. We empirically assess how bidding systems, knowledge gaps, and transactional stressors affect decision-making.

A nationally representative sample of 800 adults participated in a mixed-methods study comprising an online auction experiment and a survey. Participants engaged in simulated property bidding under four conditions: a control, sealed bid, estate agent and online platform. In the control condition, participants indicated what they thought was the maximum amount a friend or family member should pay for a given house. In the three other conditions, the participants bid on houses for themselves. The bidding used realistic house descriptions and budgets. A survey then assessed participants’ knowledge of rights and responsibilities, their experiences and expectations of transactional stressors, and their preferences for system reforms. 

The experiment found that open bidding systems including estate agent and online platforms led participants to bid significantly more than in the sealed bid and control conditions, often exceeding their pre-stated ideal budgets. The survey revealed that knowledge of rights and responsibilities is low, with widespread misconceptions about legal obligations and protections. Two-thirds of all buyers reported experiencing at least one transactional stressor, but this rose to 84 per cent of buyers who had purchased in the past three years. Half of all sellers had experienced at least one stressor. Conveyancing delays for both buyers and sellers and unexpected costs for buyers were the most common. When asked which elements of the system they would prefer, participants leaned towards online bidding platforms, seller-led surveys and legal binding upon contract signing. Participants also believed that online bidding platforms would be the most likely system to reduce house prices in Ireland. The data from the experiment suggest that this expectation may not be met.

The findings highlight how behavioural dynamics – such as competitive pressure and poor information – can lead to disadvantageous decisions for both buyers and sellers in the Irish housing market. While participants favour the transparency of online systems, their behaviour in auctions suggests that open systems may unintentionally push up prices. The prevalence of transactional stressors and knowledge gaps underscores the need for improvements, potentially with clearer guidance and streamlined conveyancing. The report considers some areas for reform that would align system design with behavioural insights, with a view to reducing stress for both buyers and sellers and improving decision-making and trust in the property market.