Housing affordability has deteriorated to the worst level ever recorded, with alarming new figures revealing an average income earner would only be able to afford one in 10 NSW homes.

And even those on $220,000 a year, putting them among the top 20 per cent of earners, can now only afford a third of NSW homes, PropTrack’s latest Housing Affordability report has revealed.

The bombshell report, released exclusively to the Saturday Telegraph, laid bare the devastating toll of 13 interest rate hikes since May 2022, coupled with years of runaway growth in prices.

It deemed NSW housing affordability the worst since affordability records began in 1994, with PropTrack estimating the market was also less accessible than over the decades preceding records.

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Emma and Jono with their son Archie, 2, preparing to sell their Bexley home. Picture: Jonathan Ng

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This included 1989, when interest rates were at a record high of 17 per cent, with today’s higher prices relative to incomes being the critical factor pushing new buyers out of the market.

Earners on $114,000 a year, the current median state income, could afford only 10 per cent of homes, PropTrack revealed.

With the Sydney median house price now approaching $1.5m, experts warned that even with cash rate cuts the housing issue could become even more critical if sluggish housing construction continued.

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PropTrack’s Housing Affordability Report assessed the share of homes that households across the whole income distribution could afford to purchase.

PropTrack senior economist and report co-author Angus Moore said the results showed the market was becoming off limits for all but the wealthy.

This Tennyson Point sold at auction at the start of September $1m over the reserve.

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Most of the people who could now realistically afford homes were those with property equity, family wealth or very high income earners, Mr Moore said.

“Where this leads us is it is very, very, challenging for those middle income households that don’t have significant wealth,” he said.

It took an average homebuyer 6.5 years to save a 20 per cent deposit, according to PropTrack.

Mortgage Choice Dee Why broker James Algar said more than half his first-home buyers clients were relying on funds from the “bank of mum and dad” for deposits, ranging from $30,000 to over $700,000.

“I’ve also had at least three (first-home buyers) this month where mum and dad are selling one of the family or grandparents property … kind of an early inheritance or a transfer of wealth,” he said.

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Other arrangements included parents going guarantor, adult children living at home longer to save for a deposit or buying property off family members for a discount.

Breaking into the housing market as a renter has become near impossible. PropTrack revealed that a typical renter household in NSW that may be looking to buy their first home could afford just 8 per cent of homes.

“More and more people are staying at home with mum and dad and buying an investment property, not classic rentvesting but a sideways help from mum and dad,” Mr Algar said.

Current mortgage holders were also struggling with hefty loan repayments.

“There’s a fair number of people who are downsizing their home loans. Even young families are saying ‘actually it is more expensive for me to hang on to this, maybe we will move on and buy a smaller property’,” Mr Algar said.

East Lindfield home sold at auction more than $1m above owners hopes.

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He said mortgage holders were also seeking lower rates or spreading their repayments over a longer term to manage cash flow.

Mr Moore noted that Sydney’s prices had continued to rise, climbing 6 per cent over the past year despite existing affordability challenges and the highest interest rates in a decade. Regional NSW prices were up 4 per cent annually.

“We are starting to see incomes grow but not at the same rate at which interest rates have over the last couple of years, not enough to offset those mortgage costs,” Mr Moore said.

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“The cash rate is not going to sustainably improve affordability over the long term, its building more homes where people want to live.”

Young couple Emma Kibblewhite and Jono Blair are selling their two bedroom unit in Bexley through Marc Warren at McGrath St George, and are looking to upsize to a bigger home with their two-year old son.

“Things are selling for a lot more than we thought. We’ve been really shocked by the selling prices,” Ms Kibblewhite said.

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Emma and Jono are selling their unit with a guide of $675,000 through Marc Warren at McGrath Sans Souci. Picture: Jonathan Ng

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A property she had loved sold more than $300,000 over the asking price and they were having to move suburbs to afford the kind of home they wanted.

There was some concern about the larger mortgage they would be taking on as well.

“I keep thinking to myself we are a couple on two relatively good wages, it baffles me … its so unaffordable for some people right now,” she said.

Chief executive officer of REA group Owen Wilson said “we urgently need to build more homes” and that “sensible tax reform of the housing market is a viable and effective approach to meaningfully impact housing affordability.”

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