Would you trade price appreciation for a chunk of your down payment?

[wiggin]

Is that good or bad? My house was £124k to buy.

That is incredibly good. Median home cost in my state is $400k, and that includes all sorts of dirt cheap rural areas.

I'd like to see the working out. Do you have taxes that apply to homeownership? Here all property taxes are paid by the property occupier not the owner, do you tax the landlord there?

There are a variety of models out there. The better calculators allow you fine grained control over e.g. opportunity cost returns, property taxes, etc. Lots of media organizations do this as well - IIRC the Economist runs a house affordability index every few months for major cities and there are a lot of others out there.

As for taxes, there are two basic kinds of taxes: The tax you might pay on capital gains upon selling your home (there are some exceptions for a primary residence, though) as well as annual property taxes you must pay irrespective of whether you live in the home. This typically comes out to ~1% of the assessed value each year, though there's a great deal of variation across municipalities in the US. If you're renting, you're not directly paying the tax though obviously it gets factored into the rent you pay.

One other factor to remember is that rent typically goes up every year whereas your mortgage (barring rate changes) is fixed at the time of purchase. If property doubles in value over a decade then ten years later you're holding an asset that's doubled in value but still paying based on the original price - if you're renting then your landlord will have asked for rent increases repeatedly over that decade. If you're looking at the interest-only part of the mortgage as the cost then as you've spent a decade repaying your interest part will have gone down.

The calculators account for this as well as net present value arguments. In many cities in the US it still isn't 'worth' it.

There are still intangibles that can make it a good idea rather than just looking at the dollars and cents, and it's possible to find bargains. I certainly plan to become a homeowner at some point, mostly because the availability of decent rentals in the larger sizes I'll need eventually just aren't that easy to find - that and it's nice to be able to modify (or build) a home to meet your particular needs, rather than feeling unable to change even small things without getting approval from a landlord.