I think you're missing something fundamental here. During inflation debt on appreciating assets is good. As long as your interest rate is below the rate at which your asset increases in value with inflation then your debt is profitable.

What you suggest you truly risk is the inability to make your payments. As an American I don't know exactly how that tends to work out in Australia. Here as long as one is one top of it and owes less than the home is worth it largely works out OK.

Renting is a HORRIBLE solution as you have NO control over rental rates or availability.

That said I agree that you should sell the home that you're having a hard time making the payments on. It's a good preemptive move. However if you do so you should go in to as much debt as possible on a smaller home and pocket/invest the remaining money in something very stable that is likely to increase with inflation and can be easily liquidated. In the US that would be gold, IDK about there.