Research Highlights the Need for Buyers to Make Informed Decisions

Spring is known to be one of the busiest selling seasons of the year. The warmer weather and the need to find a new home before Christmas holidays begin can push many people into the real estate market during this period.

However, new research from Commonwealth Bank has shown many buyers in Australia are rushing into their property purchasing decisions, largely due to emotional factors, family pressures and the fear of someone snapping up the property before they do.

According to the research, 65 per cent of home buyers believe the performance of property prices recently has been largely spurred by the fear of people missing out. In turn, this has caused a significant portion of buyers (58 per cent) to rush into buying property without doing proper research.

Events that occur in buyers' lives also had a substantial impact on how fast they made their property purchasing decision, such as having a new baby or needing to fulfil bridging finance requirements.

"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," said Timothy Sharp, executive coach and clinical psychologist.

At the same time, these emotional factors have led many home buyers into exceeding their budgets in order to secure the property they have in mind.

Almost one in five buyers (19 per cent) stated they paid more than they had budgeted because they did not want to lose the property to another buyer. An even higher number of investors admitted to paying more for properties, with 48 per cent admitting they exceeded their budgets.

"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," said Clive van Horen, Commonwealth Bank general manager of home loans.

As a solution to this, Mr van Horen suggested buyers should do their research before entering the real estate market.

Another helpful tip from Mr van Horen was to set a clear budget before making an offer on the property, as this helps to reduce the risk of overspending.

"Dedicating extra time at the beginning of the process will pay off in the long run," he concluded.