Yet among the 10 suburbs with the lowest median incomes a different story played out. These 10, including the city centre, St Albans and Box Hill, saw an increase of just 2.2 per cent.
But this masked some major falls with the worst hit, Clayton, having its median income drop almost $2500 to $32,728.
Wages as measured by the Australian Bureau of Statistics increased by 9.6 per cent across Victoria over the period.
Middle suburbs have also failed to keep up with the income growth being enjoyed in richer parts of the city. In these areas that include Brunswick West, Upwey and Rowville, median incomes lifted by 10.2 per cent.
SGS Economics and Planning partner Terry Rawnsley said the gulf between the rich and poor of both Sydney and Melbourne had been growing for the past two decades.
“Inner city suburbs have access to high income jobs in finance and insurance, and professional services far and beyond what can be accessed from middle-ring suburbs,” he said.
“Residents of middle-ring suburbs have had to commute longer distances to access these high-income jobs or make do with the lower paying local jobs.
“The income divide has also resulted in a wealth divide as more rapid housing price increases in inner suburbs and higher income have been invested in a range of assets, providing a further boost to the income of inner city suburbs.”
When it comes to average incomes, which can be skewed by a small number of very well compensated individuals, the widening between top and bottom has been even larger.
The average income among Toorak’s residents grew by 17.6 per cent between 2013-14 and 2017-18 to a Melbourne high of $196,816.
Across Alphington the average income increased by just 4.2 per cent to a city low of $39,111.
The average incomes are heavily affected by capital gains which are inflated by low interest rate settings which fell from 2.5 per cent to a then record low of 1.5 per cent over the period.
In Toorak, 1381 residents declared net capital gains worth $426.3 million or $308,689 each in the 2017-18 tax year. Four years earlier, the average gain was $193,000.
In Alphington, 560 people declared net capital gains of $14.7 million or $26,250 each.
The Reserve Bank has previously warned that ultra-low interest rates can lead to asset bubbles. It has also resisted taking official interest rates into negative territory, in part because people with large savings would be able to deploy that cash into other assets.
People on low incomes and without savings may actually suffer under a negative interest rate regime.
Speaking before the coronavirus pandemic, RBA governor Philip Lowe warned that flat real wages diminishes “our sense of shared prosperity” and results in parts of the community questioning if they had benefited from Australia’s economic success.
Research from the Productivity Commission released this week revealed people under the age of 35 have suffered a fall in their incomes over the past decade. This drop is making it even tougher for them to save or invest in assets currently enjoyed by older Australians.
Across the best-off 10 suburbs in Melbourne, the average age has increased by two years to almost 40 since 2006. In the worst-off, the average is now just over 31, having barely changed since the 2006 census.
Shane is a senior economics correspondent for The Age and The Sydney Morning Herald.