Thanks everyone for your thoughts. It seems you are right about the 30% rule - I just googled and it seems 30% of your gross income "should" be be spent on rent/mortgage. Fortunately, I worked it out based on our after-tax income, so using the before-tax rule, we are sitting at about 35% - and that is with me only working casual while we are in baby-making mode. Once I go back to work, this ratio will decrease.

So, I feel better with that figure! Now just to weigh up the pros and cons of renting close to work/where we love/in a small and old unit OR buying further out in the suburbs/where love less/in a big house with a yard... Any more advice/experiences appreciated. Anyone made one decision or the other and lived to regret it?