Stumping up for an old house worth $1.2M: Is it worth it?

Three years ago, my wife and I and our three children moved to the NSW south coast, renting a beautiful house for $600 a week. I am aged 45 and earn $120,000 a year, while my wife earns $59,000. We want to buy a home, but the property market here starts at $1.2 million for an ordinary, old…