To give up a rent-free flat for a more baby-friendly home?

Also investigate how having a dependent will affect the amount of money you can borrow. Also are house prices rising in your area? Seems like house prices are always rising in London. Are you saving faster than house prices are rising?

Yes, my friends are still sleeping with the toddler. Obviously this stuff varies a lot by family, but a nursery isn't really needed early on. Nice to have if there's room, but not essential.

So would I unless you are able to buy a cheap place, maybe an auctioned property or something like that.

People often lived in second floor flats (and higher), with babies. You can carry a baby upstairs in a sling and fetch the buggy up separately if you can't manage both. It's doable.

He or she will presumably sleep in your room for the first year.

Save as much as you can now but keep your eye on the housing market.

My neighbours have a buggy - with a flat pram - that folds up very small.

I’m not going to lie to you the pram thing will be a pain in the bum but personally I’d say worth it for the money you’ll save. Keeping the pram in the car will help, also if dh is wfh maybe he can nip downstairs to give you a hand?

Figure out what a rough mortgage payment will cost you and then save that amount for next few years to pay off the mortgage in addition to the down payment. Leave the pram in your car and be very appreciative of whoever is giving you the free housing you could re work the space and try and find a way to stay as long as possible. IKEA do fold down desks is there a hallway inside the flat that you could utilise and small nursery furniture (also ikea),make it as functioning as you can hire storage space if you have to but stay and save hard.

I'd go for a mortgage now while you have 2 incomes. How will your mortgage affordability be impacted if you take extended leave after the baby is born, or if you have large nursery fees?

I seem to go against the grain here but if you’ve got a good deposit saved already I’d be getting on the ladder. The difference in monthly repayments between a 25 and a 30 year mortgage makes things much more affordable.
having said that there’s no way I’d be taking on a £500k mortgage under any circumstances, that’s insane. Move to a cheaper area.

Get a buggy that you can fit in your car boot and store it in there. You will be fine and grateful for the extra cash if you are planning on a second.

I say stay and save as much as possible. You will look back and be glad you did. Even with one DC

Your husband (or you) can work in a coworking place/cafe rather than at home.

Baby in your room until 6 months or a year, at that stage one of you finds another place to work.

I think better to stay in slightly cramped circumstances for the next 2-3 years and than have a lot more money to buy something lovely.

Stay for now and save every penny you can towards a larger property in the future. You won’t get this chance again. Really think about what you need for the baby - have a pram in the car so you don’t have to carry that up and down. Don’t get carried away but g baby stuff as half of it never gets used.

Many economists are predicting a market crash in 2027, don’t buy unless you have to as the markets at the moment are just too unpredictable. Suggest keeping an eye on houses as there is data to show the housing market is slowing down particularly for £1M plus houses.

Save like mad, clear the flat of all unnecessary furniture.
Borrowing baby bits is great if you can or buy in charity shops so they can be moved on quickly. Go for the lightest buggy you can that can be used from newborn. Forget the awkward heavy ones and keep in the car boot.
It can be done.
You have time to do a real clear out.

This. It will be a pain..I did the same and dealt with baby years in not overly suitable accommodation. It was worth it as we then moved once back at work, career picked up and had more options.

I wouldn’t move. The baby can room in with you for the first few years, they don’t need their own room. Also, go light on baby stuff in general, they don’t need much.

This will allow you to save for a few years and then use that to buy when planning/pregnant with the second as at that point the first will need to move to their own room.

With the cost of living and things as uncertain as they are I wouldn’t even think about leaving there until the 2nd baby was in existence, make the most of your situation and comfortably enjoy your first baby

Small ones are fine in small spaces. Aim to move in 2 or 3 years time if you want a couple or when they are 4 or 5 if you decide to stick with one.

You can manage for a couple of years - been there and done that.

Stay put!!! See if you can save (In premium bonds preferably) £2100 a month from now till next year. Don't touch it and see if you can survive on what you have left. Money is a huge source of friction in a relationship, and especially with the addition of children. Good luck!

Stay! There's nothing to stop you doing some house hunting, but certainly don't feel you have to live in a house when you are living rent free in a place you love. We lived in a 2-bed third floor walk up when I had DD and we were still there two years later when DS was born. We had a babyseat that clipped onto pram wheels - perfect for carrying up/downstairs when baby was asleep (or not). I actually think living all on one level in a flat is ultimately easier than a house when children are small - no need for baby monitors or stairgates - you can keep an eye on them and they can hear you wherever you are. You actually don't need loads of stuff when they are tiny and not having loads of space is a great disincentive to acquiring loads of unnecessary tat. We had an old fashioned playpen in the corner of the living room where we could put DD/DS to play safely if we were busying around the flat. In the evening we'd pile any toys in there for an instant clear up. The baby will be in your room to start with anyway and then just needs a bed which could go in the corner of your office. They don't really play in their rooms until they are quite a bit older. We invested in a sofa bed for the living room to maximise all options. I have such great memories of living in that flat (central Paris) - friends who visited from the UK actually commented on how labour intensive living in a house was by comparison. Best of all in your case it will enable you to save, save, save. It really is a no-brainer.

Stay as long as you can possibly manage it, even if you rent a tiny office space elsewhere to work from it would likely be less than a flat for 3. At worst you want to still be there in a year and you could make it 2 without too many problems.

Once you are ready to move on it does not have to be a house, you could rent or buy a bigger flat. However since moving is a pain, and costs quite a bit in fees, you may want to save madly and wait for the house.

Exactly what I would do

Stay and get saving - pray for a property crash or interest rates to substantially drop. Leave that buggy in the car, no one wants to drag one up flights of stairs each day, particularly after the birth. Maternity is generally quite expensive, as is daycare for little ones, so I wouldn’t rush into anything until you have a better idea of monthly costs for a small family. Daycare was £1,600 a month last time I paid it.

Working from home in a small flat with a newborn is not a very good idea. You might be lucky and get a nice laid-back baby who doesn't cry much, but if they're a colicky baby it will be exhausting to be working with that in the background, on top of sleepless nights. I know multiple people who stopped working from home when the baby arrived.
If he is able to work flexibly, working from home has the benefit that he might be able to give you a break occasionally, but balancing that with getting the hours in has its own tensions - in some ways it's easier if he has set hours.
(We had the best of both worlds - DH's commute was 2 minutes, so he could come home early to cook dinner and give me a break at the low point of my day, then head back to work to finish off.)

How often do you both wfh?

I wouldn't necessarily stay in an expensive area to be close to family.