When the Reserve Bank leaves rates on hold on Tuesday, many Australians will also be feeling like their finances are going nowhere.

New data from ME bank, plus recent estimates from data firms and government statisticians, helps explain why many households aren’t spending – because it seems impossible to get ahead.

Houses, the biggest investment of most Australians, are cheaper than ever to repay, but harder than ever to save a deposit for. And that’s only one of the reasons why it feels like we’re treading water.

It’s hard to save for anything, deposits included, because the banks are paying such dismally low rates on savings accounts. It’s not necessarily their fault either: the Reserve Bank’s historically low cash rate is partly to blame.

It’s especially hard to save for a deposit because house prices are going up and up in large parts of the nation. In the two worst-affected capital cities, Sydney and Melbourne, prices have almost doubled since the global financial crisis.

In Sydney, the median dwelling price increased by 99.4 per cent since 2009 to now be $850,000, and by 85 per cent in Melbourne to now be $640,000, according to CoreLogic’s latest figures.

There are pockets of affordability. Since 2009, Perth prices rose by only 8.1 per cent and Hobart’s by 9.5 per cent. But that’s even worse news, because these ‘affordable’ areas are where unemployment is highest and economic growth weakest – what ME bank economist Jeff Oughton described as a “vicious circle”.

The labour market is at the heart of our feelings of financial inertia. Incomes are falling, job insecurity is at a record high, and underemployment is also very high, ME bank’s latest twice-yearly report on household financial comfort found.

One-in-four households saw their income fall last year while a record high of one-in-three reported job insecurity, according to the bank’s survey of 1500 people.

Only 32 per cent of households reported income gains in 2016, down from 38 per cent in 2015.

A further two-thirds of part-time workers said they wanted more hours, and 70 per cent of casuals said they wanted to go part-time. Without sufficient hours, the finances of these workers are likely to be stagnating or going backwards.

“Not only are house prices rising faster than you can save in Sydney and Melbourne, and there’s a bit of momentum in a few other places, but for 25 per cent of Australians their income is going backwards. So they can’t save fast enough, and their incomes are falling,” ME bank’s Mr Oughton told The New Daily.

“When the statistician says the unemployment rate is around 5.8 per cent in Australia, that’s great compared to Europe, but a lot of people on part-time or casual work want to work more. They need the income to build up their savings to buy a house or just for a financial emergency – because a third of Australians only have about $1000 in the bank.”

Home loan deposits are also less affordable because prudential regulator APRA has been cracking down on property lending since 2014 by insisting that banks ask for 10 per cent deposits or higher.

Before the global financial crisis, banks were allowing 5 per cent or even zero per cent deposits, according to APRA.

Another symptom of this ‘water treading’ is that first home buyers are ageing while landlords gobble up the market.

South Australia provides a snapshot. The number of first home buyers older than 40 increased in SA from 18 per cent in 2011 to more than 40 per cent in 2015, according to SA-based HomeStart Finance.

Home loan repayments are cheap thanks to the Reserve Bank, but this isn’t helping – arguably because that very same record-low official interest rate has attracted huge numbers of investors into the market, pushing up prices and thus deposits.

This can be seen in investor lending, which as of November 2016 accounted for almost half (49.6 per cent) of new home loans, excluding refinancing. It means investors are crowding out owner-occupiers.

Investors haven’t taken up such a large chunk of new loans since 2015, when APRA imposed new regulations in an attempt to protect the financial system from a GFC-style crash.

‘Governments need to intervene’

Mr Oughton said the situation is so bad that state and federal governments, not the Reserve Bank, need to step in and invest heavily in infrastructure, vocational retraining and health to kickstart the economy.

The root cause of the economic malaise is that households aren’t spending. And they won’t “loosen the purse strings” until they are are comfortably employed (via infrastructure projects or with the help of retraining) and feeling comfortable about future financial shocks (such as big health bills).

“If economic growth picks up and job growth improves, people will loosen the purse strings. But at the moment, the household sector is cautious, and rightly so.”