If we wait until after the HST kicks in will the market go down?

This is a question I have been asked by many first time buyer clients lately. In fact, I am always asked the Chrystal Ball question by first time buyers ' should we wait' ? If I had answered yes each time since 1998, with the exception of the months before July 2008, I would have been dead wrong.

However even if I took a stab at it, as I did in 2003 when housing economists predicted a big slow down by winter 2005 (ouch bad advice eh?), I have come to the conclusion that even if I was right I could be wrong.

The reasoning is this:  If you are renting a small house in the burbs for 1400/month and you purchase today. Then, lets say 6 months after you move in prices drop 5%.  You may be a little peeved. Yes it would have cost you $8400 in rent but it certainly would not be  $15,000 - $17,000 (average first time buyer starter house x 5% drop) . However in reality, you would be living in the house so really the price drop would not materially effect you.

On the other hand, if you waited and paid rent for 6 months and then the market did not drop but in fact went up 2-4% - which has been happening in the GTA year over year - then you would be out $8400 + $6000 - $12,000. Except this time it is directly out of your pocket. you would be materially effected by up to 20,000 + dollars.

I think the first scenario would be the lesser of two evils?