Bidding wars are pushing house prices as high as €100,000 over the original asking price in certain parts of Dublin. 

A new report by the ESRI has concluded that the phenomenon is one of many factors pushing house prices ever higher. 

The organisation carried out an auction experiment, in which people made offers for property in both an open process and where their bids were sealed. 

It concluded that people who bought homes through an open bidding process were more likely to exceed their original budget and pay than what property’s original value. 

The report’s author Dr Deirdre Robertson said people are very often “navigating a system they may not fully understand and increasingly experiencing stress”. 

On Lunchtime Live, Newstalk’s Chief Reporter Barry Whyte said he was in “no doubt” that estate agents undervalue a property to create bidding wars, having recently compiled a series of reports on the housing crisis. 

 “I spoke to people who were selling their homes and they were saying, ‘Look, we see the house worth maybe €400,000.’

“And the estate agent would say, ‘We'll put it up for €325,000’ - they were openly just saying, 'Look, we want bidding wars on this'.

“People are desperate and people will just keep bidding and bidding and bidding.”

Housing in Dublin. Picture by: Leah Farrell / © RollingNews.ie

Barry and his partner recently bought a house with his partner himself and recalled bidding a house in Drimnagh, where the house continued to spiral far in excess of the original asking price. 

“Every couple of hours, the bids were just going up and going up and going up,” he said. 

“It's anonymous as well.

“It was on the market for 350 grand. It ended up selling for 525 grand -  way above its asking price.”

In the end, the property quickly came back on the market, which Barry suspects means the buyer could not afford it in the end. 

“We noticed that with a few houses as well,” he said.

“So, I think that's what the online bidding creates, it’s too easy and people get carried away.”

Barry added that there are wild variations in how much higher bidding wars would drive prices, depending on the popularity of the area. 

“Say Finglas, it was maybe €30, €40,000,” he said. 

“But then in Dublin 8, you were looking at €70, €80, €90,000 above asking price - sometimes much higher.

“Crumlin in particular, you were going over €100,000 over the asking price.”

Main image: A man walking past 'For Sale' signs in Dublin. Picture by: Leah Farrell / RollingNews.ie