Interest rates are super-low and the proportion of income Australian households are devoting to interest payments has fallen sharply in the past few years. But that hasn't done much to help those wanting to get a foot in the property market. Australian Property Monitors says the share of Sydney mortgages being taken out by first home buyers is wallowing around an historic low of 7 per cent.

One reason for this is the deposit hurdle caused by soaring house prices. Even though low interest rates have made it easier for borrowers to service big loans, it's harder and harder to scrape together a down payment.

"This is a real frustration for potential first home buyers – often they could afford the repayments but they can't get the deposit together," says Domain Group economist, Andrew Wilson.

The pace of property price growth in Sydney underscores the challenge first timers have in raising a deposit – this year the city's median house price has been rising by about $2000 a week.

"That means that every week that goes by potential first home buyers get further behind," says Wilson.

Anaemic wages growth and low interest rates on bank deposits are adding to the struggle.

Sydney University housing expert Dr Judy Yates says a growing number of first home buyers in Sydney are getting assistance from parents to raise a deposit. Those without parents to help risk being excluded from the housing market.

"I really worry about how that is going to reinforce existing inequalities in the city," she says.

Government grants to first time buyers have been largely counter productive because they only help stoke demand and push up prices.

The latest property price surge is likely to drive down the rate of home ownership in the city, especially in younger age cohorts. The last census, taken in 2011, showed the share of households owning their home outright has slumped by more than 13 percentage points since 1995-96.