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Fear of missing out influencing decisions of Aussie home buyers
- New research from Commonwealth Bank reveals that many Aussies believe property prices are being steered by a fear of missing out on property
- CommBank is encouraging Aussies to take their time and do their due diligence before purchasing a property
9 September 2013: Spring peak buying season is a time when many Australians will be hoping to secure the perfect property, but new research from CommBank has shown there is a perceived fear of missing out which is influencing the home buying process.
Whether it’s family pressures, emotions or a good financial deal, research commissioned by CommBank highlights some of the key reasons Aussies are rushing in and buying property before they are ready.
The research revealed the majority of home buyers (65 per cent) believe that property prices are being steered by a fear of missing out, which is causing most (58 per cent) to rush in and negotiate a price before they have done their due diligence.
According to the research, the fear of missing out psyche is also having an impact on buyers’ emotions with 49 per cent worried that they would lose the property to another buyer.
Dr Timothy Sharp, Executive Coach and Clinical Psychologist, says, “Frustration and a fear of missing out are typical reactions associated with the complexity and importance of buying a property. It is however the biggest financial decision most of us will ever make so it’s crucial that the decision is a rational one.”
Aussie property buyers are also being motivated by various external factors when it comes to making a decision quickly:
- 89 per cent of subsequent home buyers admit life events play a significant part in influencing their property purchasing decisions, citing additional family pressures such as having a new baby and the kids starting school, as driving them to buy quickly.
- 55 per cent of investors admit to negotiating a price before doing their due diligence with the research revealing they are driven to buy more quickly because they believe they have found a good financial deal and don’t want to miss out (30 per cent).
- For first home buyers the top motives for making a fast property decision are because they are tired of renting (22 per cent) and because they believe it is cheaper to buy than to rent (21 per cent).
Clive van Horen, General Manager Home Loans, Commonwealth Bank, says, “A competitive market place is always going to increase buyers’ fears of missing out but it is important that buyers don’t rush the process as this might give them cause for regret down the track.
“That is particularly true for subsequent home buyers who we know face a range of external influences – a child on the way, relocation for a new job or the need to move for financial reasons – that adds to the pressure to buy as quickly as possible. It’s easy to get caught up in the drama of the marketplace rather than taking advantage of their previous home buying experience, to help them make the best financial decision.
“Equally, investors need to research the market carefully to ensure any decision they make is based on a rational analysis of the financial benefits and risks rather than an emotional reaction to wanting a specific property. While interest rates are currently low, home buyers need to be prepared for future fluctuations, so any property purchase needs to be seen as a long-term financial investment.”
The research also revealed that buyers are willing to pay over the odds because of their fear of missing out:
- 71 per cent of subsequent home buyers will pay over the odds if they need to find somewhere to live urgently citing the fact that their previous property has already sold, if they are facing financial impacts like requiring bridging finance (69 per cent), or life events like a having a new baby (58 per cent) as being the cause of the rush.
- 52 per cent of investors will pay over the odds because they really wanted the property and didn’t want to miss out.
- Nearly half (49 per cent) of first home buyers agree they probably paid more than they should but really liked the property and didn’t want to miss out.
When it came to securing a property, research respondents also indicated that they didn’t always stick to their budget. Almost one in five (19 per cent) subsequent home buyers admit they actually paid more than they had budgeted when they purchased their last property because they didn’t want to miss out. Amongst investors, 48 per cent admit they paid more than they should have but they really liked the property.
“It’s clear from this research that there is a fear of missing out amongst Australians looking for the perfect property, but it’s so important that buyers don’t rush the purchasing process as this can lead to buyer’s remorse down the track. Whether you’re a subsequent home buyer, investor or first home buyer, do your market research and set a clear budget before you make an offer. Dedicating extra time at the beginning of the process will pay off in the long run,” said Van Horen.
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For more information please contact:
T (02) 9118 1706 / M 0403 681 515
Note to editors
- Was conducted among 1,098 Australian aged 18 and over who have bought a property in the last five years or are looking to buy within the next two years
- Fieldwork commenced on Friday, August 16 and was completed on Monday, August 19, 2013
- After interviewing, data was weighted to the latest population estimates sourced from the Australian Bureau of Statistics
Dr Tim Sharp is one of Australia’s leaders in positive psychology and happiness. He founded The Happiness Institute in 2003, working with individuals, families, schools and organisations to enhance happiness.
T (02) 9118 1706 / M 0403 681 515