It has too many stairs, no garden and a tiny kitchen - yet we've decided to stay in our spectacularly unchild-friendly flat. Most people agree that it would be sensible to sell up and find something bigger and more practical. Even complete strangers tell me as much. “You'll need to get stronger if you want to do that every day,” they shout cheerfully when they see me bumping the pushchair, laden with shopping bags and a wriggling toddler, up the steep, slippery steps to our front door. And that's without them seeing me climb three further flights of stairs with 15-month-old Louis to our top-floor two-bedroom flat.

But my boyfriend Charlie and I simply can't afford a house around here. Charlie bought our flat seven years ago, when a two-bed flat in Highbury, North London, cost £200,000. Now it's £400,000 to £500,000 (much more if you want outside space), and salaries haven't risen to match. A three-bedroom house on the outskirts of Highbury starts at about £700,000, or at least £800,000 for a four-bed Victorian terrace. Add the cost of moving and 4 per cent stamp duty for homes over £500,000 and we haven't a hope of climbing the ladder. It would cost an extra £300,000 to £400,000 to move from our flat to a house in this part of London - so we are going to stay right here. We considered converting the attic but didn't come to any firm conclusion, and in any case it wouldn't solve the problem of outside space.

Part of the trouble is that houses in Central London are so much rarer than flats. The 2001 Census showed that of the 20 districts with the highest proportion of flats, maisonettes or apartments, 18 were in London. No wonder that 17 per cent of households in the city are overcrowded. The Government promises to build more affordable homes, but in London these are mostly flats for first-time buyers. The London Housing Federation reports that new affordable housing in London remains at an historic low. And only about a quarter of new homes have three bedrooms or more, down from nearly 40 per cent in the mid to late 1990s.

It's not surprising that parents are staying put. According to Becky Powell, a teacher who lives in a two-bedroom flat in Islington with her daughter, Mabel, aged one, and her partner, Darren Smith, a TV commissioner: “Nearly all my friends with babies have the same problem. But I'd still rather stay in Islington and have less space. We're just not ready for the suburbs. We've looked at cheaper areas of London, such as East Finchley, but we've decided not to move because we really love living here.”

Other nationalities are happier with apartment living. Plenty of well-to-do families in France and Italy choose to live in city-centre flats rather than houses. They prioritise communal gardens and local amenities over living space. Here, families still believe that they need a garden, a large kitchen/diner, at least three bedrooms and decent parking.

“People are moving farther afield or compromising,” says Charlie Fernihough, a manager at the North London estate agent Hotblack Desiato. “They set out to find a house then realise they're not going to get one for their money and go for a flat instead. Because of the architecture in North London, you can get flats with the same square footage as small houses - and much cheaper.”

Elvira Campione, a full-time mother, and her husband, Savario, a pilot, have lived in their flat in Fulham, West London, for ten years. They have two children, Frederic, 2, and Benedict, eight months, and no intention of moving. “I live right by the Tube,” Elvira says. “Most importantly, I live near the Hurlingham Club. This is my social life, my sport and where the children go for activities and to the crèche. It is the sole reason why we will not move.” And there are benefits to flat living: “Having no stairs is great. And I can keep an eye on both children.”

As more householders are forced to stay put rather than trade up, they may find, as we have, that the convenience of living on one level does not, unfortunately, stop the dreams of a three-storey Georgian house on a quiet tree-lined street. But, unless we win the lottery, we shall not be moving.

FACT FILE

Flat-living with children:

Build fitted cupboards so you can hide toys.

Remove all clutter.

Create a workspace by building a flip-down desk.

Put a good sofa bed in the living room for guests.

Leave your pushchair in a communal area.

Times recommends

• Second homes: credit crunch casualty or money-spinner?
• How I built my own sliding house
• Top 10 incentives for house buyers