Housing affordability has deteriorated further due to sluggish wages growth and soaring house prices in Australia's two largest cities.
The Housing Industry Association's affordability index for the September quarter fell by four per cent compared to the previous three months, and 2.1 per cent year-on-year.
"Affordability is now at its least favourable since the final quarter of 2014," HIA senior economist Shane Garrett said.
Mr Garrett said the Reserve Bank's two interest rate cuts earlier this year had provided a temporary respite for potential buyers.
"(But) the surge in house prices in Sydney and Melbourne, along with near stagnant earnings growth means that the pendulum has since swung backwards," he said.
A new pipeline of housing supply had helped soothe affordability pains in some markets, Mr Garrett said.
"Over 210,000 new dwellings were commenced during the 2014/15 financial year, an all-time high," he said.
However, ongoing shortages of new residential land in key markets and taxation on new housing continues to hurt affordability.
"The unilateral increase in variable mortgage rates over the past month is further aggravating the situation," he said.
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