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I forgot to mention that my current home is too small and I need to upgrade no matter what. Lets say my home is worth $400,000 and the market corrects another 5% ($20,000) making it about 20% correction over the last 18 months in my area. The dearer property also drops 5%(purchase price $500,000 drops $25,000).By selling now and buying when market bottoms out I am ahead on $25000.00. It will cover all of my change over costs.
In a downward market your equity/money is better off in the bank earning 6% which covers the rental costs.Depends what you believe the market will do over the next 12 months. I think my local market has not finished the correction and may drop further over the next 12 months. As I am upgrading to a more expensive house it makes sence to delay the purchase. Interest after tax on my money covers rent and adds money to bank balance. At worst if the market stays the same I have lost nothing. If something unexpected causes a spike in values then I am able to buy straight away.
I work in Real Estate in NSW and the market is still slowing. What is the market doing in your local suburb. If market still slow and going backwards then renting may save you some money. All depends on the area that you are going to reside in. I am about to sell my home and rent for 12 months as in my area the market is still not flash.
Chubby
