A key driver is the rise in mortgage interest rates. Angus Moore, senior economist, said the three RBA interest‑rate hikes made in February, March and May increased mortgage rates and further constrained household borrowing capacity.

Because of higher rates, mortgage repayments now take up 35.5 % of average household income – the biggest share since 1989. According to data from realestate.com.au, a household earning about $125,000 a year can afford only 12 % of the homes sold across the country.

The affordability squeeze is felt everywhere. The report found affordability declined in every state, with South Australia the least affordable at 7 % of homes and Victoria the most affordable at 16 %.

Economists say the situation will not improve until the supply of new homes rises sharply. Without a significant increase in housing construction, the combination of high loan costs and limited stock will keep affordability at historic lows.