I am in agreement with both Gareth and King. When you can rent a lot cheaper than a interest only mortgage, renting is an absolute nobrainer.
The danger here is not getting on the property ladder, but getting on and then seeing the entire banking system collapse.
At 43 I am probably the oldest poster on this forum and probably the only poster with childhood memories of the 3 day week and the collapse of the secondary banking system in 1974/5. The worst case scenario goes like this.
Prices begin to fall, those who bought at the top hand their keys back as its cheaper to rent. The building society repossess and sell at auction. Nobody wants to buy as prices are falling and auction prices collapse precipitously. The morons who have been buying starter homes and flats on BTL mortgages can not cover mortgage payments and repairs and voids and sociopathic tenants and dump their holdings as well. This causes prices to fall further. People stop remortgaging their houses to get their equity as they are now in negative equity. Spending slows, people lose their jobs, default on their mortgages and more houses are repossessed and sold at auction. More and more claims go into the insurer's who have only reserved for a 2 standard deviation event on their mortgage indemnity policies. They default, or their reinsurers default and the building society's capital falls below the required level. They grant no more mortgages and repossess those with positve equity but who have defaulted on one or two payments. More houses appear at auction the price falls further. People realise that the government only guarantee 30,000 of savings and begin to doubt whether they will even meet that and pull their savings from the building societies. This means less lending, further house price falls, more repossessions, building society failures etc etc.
Far fetched?
These sort of positive feedback liquidations were common in the past - ask your grandparents about the 1930's. They have been common in latin America for 2 centuries, they occurred during the economic crisis in the far east in 1990s.
We have never had a credit binge as big as this before. Credit expansions always end nastily and its going to be interesting to see how exactly this one plays out. The major problem with Britain is that financial services is one of its biggest industries and will be very badly hit if there is a credit crunch.