Housing ‘FOMO’ [the ‘fear of missing out’] has been a defining feature of Australia’s recent housing price boom.
FOMO is the psychological driver that leads people to rush to purchase a home before prices rise further, competition intensifies, or affordability worsens. As a result, they often take on more debt, stretching budgets or compromising on choice — because they believe waiting will leave them permanently priced out.
Housing FOMO is driven by:
- Scarcity — limited listings, high competition
- Social comparison — seeing peers buy
- Loss aversion — fear of missing future gains
- Regret avoidance — fear of waiting and paying more later
Finder’s First Home Buyer Report, released in June 2025, found that FOMO had become the top driver for first home buyers, overtaking traditional financial planning. Two‑thirds of buyers expected to spend over 30% of their income on mortgage repayments — a direct sign of FOMO‑driven overreach.
Brisbane-based real estate agent Damon Warat of Ray White Ascot described the condition of FOMO gripping the market in July 2025:
“Buyers are very conscious about every time they miss out on a property; if it takes them three or four months to find a similar property, there’s every chance they’re paying tens of thousands of dollars more for the same property due to the capital growth”.
“At the negotiation table, both buyer and seller are aware that the markets going up. It’s not staying the same, it’s not going down, it’s only going up”.
Following three consecutive interest rate hikes from the Reserve Bank of Australia (RBA), slowing property price growth (led by outright falls in Sydney and Melbourne), and the expectation of further rate increases, FOMO is now turning into FOOP (the ‘fear of overpaying’).
FOOP is the anxiety that you’ll buy a property for more than it’s worth, especially in a cooling or uncertain housing market. It’s the psychological opposite of FOMO and becomes common when prices soften, interest rates rise, or buyers feel the market is turning in their favour.
FOOP is a buyer mindset in which people hesitate to purchase because they worry the property will fall in value or that they’re paying above fair market value.
FOOP typically leads to low‑ball offers, slower decision‑making, reduced auction competition, and greater negotiating leverage for buyers.
According to Domain chief economist Nicola Powell, FOOP is entrenched in Melbourne’s psyche.
“People are feeling hesitant due to the war in the Middle East, supply chain issues and re-emerging cost-of-living pressures. On top of that, we’ve had two back-to-back rate hikes this year that caught many by surprise”, Powell said.
She added that expectations of more rate hikes and Melbourne’s rising housing supply were pushing “unnerved” buyers to shift their decisions, “either pausing to see what happens at the end of the year or becoming much pickier”.
“They realise that supply is rising, which gives them more choice and better negotiating power”.
“Falling prices mean great affordability, but you don’t want to be in a position where you’ve got negative equity”, Powell said.
Melbourne is obviously the ‘tip of the spear’, given its housing market has been weak for years. However, it is only a matter of time before FOOP sweeps across Australia.
