Sharedawealth...It has been said and remains true, set yourself and limit and stick to it, don't get carried away in the moment. Retain composure and try to leave emotion out of it. Be prepared to walk away, if the property passes in you will still have the chance to negotiate after the auction. Keep in mind the more you pay the more stamp duty you pay as well to hit your budget.
What you are prepared to pay comes back to; how long are you going to live there? What needs to be spent on the property now? What would you like to do to the property as far as improvements go? Would those improvements over capitalise?
Keep in mind the market is likely to be relatively flat for a while so capital gains won't be the same as the past ten years. If you pay too much it will be compounded by the time you take into account stamps, legals etc all adding to your overall buying price.
