If you look at it simply as an investment, then GNF's analysis is right, you would sell the house.
But you need to look at it as a step on the housing ladder. As such, if you get off the ladder, you may not be able to afford to get on it again. So, in my view, you should keep the house.
House value now: €180k
Mortgage: €145k
Equity: €35k
Target house: €250k
Scenario 1 - house prices fall by 20%
If you keep your house, the house will be worth €144k - the same as the amount outstanding on the mortgage. But the house you plan to buy, will be €200k. So that will be cheaper. You may still be able to buy a house as you might get a Negative Equity mortgage. Or even if you can't buy a house, you will still retain a stake in the housing market, and eventually you should be able to trade up.
Of course if house prices fall, your rent should fall as well, which would benefit you on balance.
If you sell your house, then you will be in a much better position. The house you want to buy will drop to €200k and you will have about €35k cash
Scenario 2 - house prices rise by 20%
If you keep your house, it will be worth €216k so your equity will have risen to about €70k. The house you want to buy will have increased from €250k to €300k, but you will still be able to buy it as you will have more than the 20% deposit.
If you sell your house now, the house you want to buy will still cost €300k but you will have only €35k and so won't get an 80% mortgage. You might never be able to get back on the housing ladder.
If you could predict house price movements over the next 4 years, you would know exactly what to do. But given that no one can make such a prediction, it seems to me that the safest option is to retain a stake in the housing market.
Brendan