Ask Paul: We sold our home, now it's taking too long to buy

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Sandra: We have $600,000 in savings after selling our property.

We have been renting and love the place we are renting, and have been on the lookout for a similar place but no luck yet!

I am getting anxious, though, at our money just sitting there!

woman worried renting sold family home house buying and selling real estate property paul clitheroe

I am not sure what the implications are if we buy an investment property and keep on renting.

Or is it best to purchase a place and live in it? We have another five years before retirement.

Paul: The great property conundrum! Like many property watchers, I feel that the huge boom, in particular in the eastern states, is starting to slow.

I read that Citibank is predicting a 7% decline next year, but not a bust. After some 40 years as a property owner, plus hundreds of years of history, it is very obvious to me that prices will rise for much of the time and fall, sometimes sharply, for shorter periods.

I also know that we won't pick market tops and bottoms.

Even if we agree prices are likely to flatten out, and may even fall in some sectors or areas, if we look forward we will see an Australia in 30 years with an extra 14 million people.

This means strong demand for property, so it is hard for me not to see higher prices over the longer term.

Personally, while I would hate to be out of the market, my crystal ball is not that good.

So whether you buy an investment property and move into it later or buy your own home is not really the key issue. If your rent is low, an investment property is easier to afford, with rent coming in and tax deductions on losses, but that is a tax decision.

Providing you buy, but in no great hurry, in a growth area with access to all the things we want today - entertainment, public transport, health, leisure activities and a decent coffee - I know I would prefer to be in the market than out of it.

Prices may well fall or go nowhere for quite a few years but no one really knows. In the longer term, history says that population growth and a limited supply of land makes price rises inevitable.

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Paul Clitheroe AM is founder and editorial adviser of Money magazine. He is one of Australia's leading financial voices, responsible for bringing financial insight to Australians through personal finance books, the Money TV show, and this publication, which he established in 1999. Paul is the chair of the Australian Government Financial Literacy Board and is chairman of InvestSMART Financial Services. He is the chair of Financial Literacy at Macquarie University where he is also a Professor with the School of Business and Economics. Ask Paul your money question. Unfortunately Paul cannot respond to questions posted in the comments section. View our disclaimer.