'many of these houses will still be on the market, and more besides, at lower prices. Certainly prices will either drop or stabilise in our area - no chance at all of them rising significantly IMO.'
The problem is, the interest rate will most assuredly increase, so people probably won't be able to borrow as much as they did in the past at a lower rate of interest, and then there's no guarantee the prices will fall radically.
Money spent on shelter is never down the drain because you can't exactly live without it. It's an essential. No one ever says food is money down the pan.
Going into rented for 6 months doesn't really tie you into anything. It puts you in a great position for making offers on houses and 6 months is nothing, sometimes it can take that long to complete!
When we had to move out of our last rental because the owners were selling up I was annoyed at having to get tied into another fixed term contract as we were looking to buy. 16 months! later we've only just had an offer accepted on a house and we're now in a position where we only need to give a months notice.
From what you're saying it seems to me that renting would be the way to go for you at this time. Agree with the outlook for the market, but also it would give you breathing space to complete your sale and then be chain-free for your next purchase, which is good both in being in a strong bargaining position and also, as you say, take some of the stress off of trying to set up a functional chain.
Have you seen anything you like available to rent recently? Aim to negotiate on the rent also. I don't see that it's wasted money at all, if you then have the time to see how the market fairs and to find the right house for you for the long term. Best of luck x