Bad idea due to a few factors:

1) The people with bigger wallets will hold even more of a monopoly: You think it's bad that they bought houses now? Imagine if they were able to spend 8mil to lock you out of the house you wanted. How about 10mil? 15mil? As long as they are below the 40mil mark, that house is a profit for them (At least on Balmung.)

2) This only means that people will camp it at the last minute: Imagine this. You put in a bid of 3 mil on day 1. 6 days later, you're excited - no one's outbid you! Your house seems almost reassured. Bound to you. YOURS.
Except SavvyMcUnderstandsHowAuctionsWorks waits until the last minute and puts in a bid of 3.1mil. He wins the auction, and you lose.

Auctions are bad. FFXI's auction house system is probably one of the few GOOD examples of an auction house system for a video game.