Agreed! I only heard this song for the first time a few months ago, but it's quickly become one of my favorites. I've been exploring the Kinks more since then and they're a fantastic band on all accounts--one of the few bands good enough to rival the Beatles IMO.
I have a tendency to listen to maybe 20-30 songs religiously for a few months before moving on to completely new songs/artists, so I actually haven't listened to Waterloo Sunset or anything Kinks since March or April maybe. (My current obsession is Achtung Baby by U2). I think it loses a bit of its charm after 50 or so listens, but it's still definitely up there as one of my favorite songs.