06/10/2026
I had a client ask me this during the week.
They had recently purchased a larger home to suit their growing family and were in the process of selling their existing home, which had recently passed in at auction.
The first assumption in all of this is that the market will have improved in five years. It may well have, but the question was whether that increase would be enough to cover the other costs incurred in the meantime.
With some homework set, our client worked through the income and expenses associated with holding the property rather than selling it for a little less now. Some of the items (but not all) considered included:
Rental income over five years
Leasing expenses
Compliance costs
Land tax
Council and water rates
Insurance
The potential increase in income pushing them into the next tax bracket
Additional interest on the new property as a result of not having the sale proceeds available to offset the loan for five years
Assuming the property ultimately sells for approximately 5% less than its current asking price, the numbers showed that it would need to increase in value by at least 15% over the next five years just to break even.
And that is before considering the underlying stress of knowing that, at some point, the property would still need to be sold.
Sometimes, taking a short-term loss can be the better solution than waiting. Time can magnify losses, particularly if the market doesn’t increase at the rate you expect.
On the bright side, there is another side to this. The vendors of the larger home they purchased have likely also sold for less than they had hoped, given the current market. When upsizing, saving money on the more expensive property can therefore offset some of the reduction in the sale price of the smaller home.
Ultimately, it’s the overall transaction that matters, not just the price achieved on the property you’re selling.
