Dependencies "implementation project" broken with Gradle 7.3.2

[fireandfuel]

Eclipse Buildship 3.1.5 doesn't recognize the project dependencies inside the workspace after migrating from Gradle 6.4.1 to 7.3.2.

Expected Behavior

Class files from sub projects can not be imported, the compiler can't access the classes and fails.

Current Behavior

Class files from sub projects can be imported, the compiler can access the classes like with gradle 6.4.1.

Context

This issue prevents me completely from using Java 17 and Gradle 7.3.2. I have to fall back to Java 11 and Gradle 6.4.1

Steps to Reproduce

The workspace consists out of 2 projects:

workspace
|- projectA
|- projectB

projectA is the root project that is used to import it into eclipse.

projectA >> settings.gradle:

include ':projectB'
project(':projectB').projectDir = "$rootDir/../projectB" as File

projectA >> build.gradle:

allprojects {
	apply plugin: 'java'
	
	sourceCompatibility = 17
	targetCompatibility = 17
	
	repositories {
		mavenCentral()
	}
}

dependencies {
	implementation project(':projectB')
	// other implementation dependencies
}

projectB >> build.gradle:

dependencies {
	// other implementation dependencies
}

Your Environment

Eclipse Java Development Tools 3.18.1000.v20211124-1800 Buildship: Eclipse Plug-ins for Gradle 3.1.5.v20210113-0929 Gradle 7.3.2

JDK configured as Gradle's Java home:

openjdk version "17.0.1" 2021-10-19
OpenJDK Runtime Environment Temurin-17.0.1+12 (build 17.0.1+12)
OpenJDK 64-Bit Server VM Temurin-17.0.1+12 (build 17.0.1+12, mixed mode, sharing)