Australia’s housing market has long been powered by fear of missing out. But stretched incomes and record prices could produce the opposite response – a growing fear of overpaying.

It is a psychological contagion driven by one relentless message: buy now, or lose out forever. For years, mainstream media, the real estate industry and property commentators have framed Australia’s housing crisis through one dominant lens: supply and demand.

Too many people. Too few houses. Prices must rise. But what happens when we reverse the script and look first at demand and then supply?

Demand is not simply the number of people who need somewhere to live. It is influenced by fear, expectations, borrowing capacity and the belief that property prices can only go in one direction. And that is where something very interesting may now be happening.

FOMO — the fear of missing out — is becoming FOOP: the fear of overpaying.

Remember the toilet-paper panic of 2020? Australia never actually ran out of toilet paper. We suffered a shortage of perspective. Fear created the perception of scarcity. People saw others buying more than normal, interpreted that as evidence of an impending shortage, and bought even more themselves.

Fear created demand. Demand created apparent scarcity. Apparent scarcity created more fear.

Housing is obviously different. Toilet paper is consumed; housing is an asset. But markets are driven not only by what something is worth, but by what people believe it will be worth tomorrow. For years Australians have been told: If you don’t........

© Pearls and Irritations