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Incomes in Sydney’s richest suburbs growing at twice the rate of poorest

The average incomes are heavily affected by capital gains. In Double Bay, 419 residents declared net capital gains worth $221 million or $527,000 each in the 2017-18 tax year. Four years earlier, the average capital gain in the suburb was just $73,000.

In Auburn, 249 people declared net capital gains totalling $5.1 million or $20,500 each in 2017-18.

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 lowing paying local jobs on offer.”

Red Leaf Beach in Double Bay. The average income in the suburb is the nation's highest at almost $250,000.

Red Leaf Beach in Double Bay. The average income in the suburb is the nation’s highest at almost $250,000.Credit:James Alcock

In 2013-14, the median income for the top 10 Sydney suburbs was $64,487. By 2017-18 it had grown by 14 per cent to $73,462.

Yet among the 10 suburbs with the lowest median incomes, including Lakemba, Cabramatta and Burwood, median incomes rose by less than 4 per cent.

They actually fell in some suburbs including Ultimo (down 9 per cent to less than $30,000) and Hurstville (down 2 per cent).

Wages as measured by the Australian Bureau of Statistics increased by 8.9 per cent across NSW over the period.

Middle suburbs have also failed to keep up with the income growth enjoyed in richer parts of the city. In suburbs such as Brookvale, Malabar and Annangrove, median incomes grew 10.3 per cent.

Mr Rawnsley said the income divide has created a wealth divide. “More rapid housing price increases in inner suburbs and higher income have been invested in a range of assets [that] have provided a further boost to the income of inner city suburbs.”

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.

Ahead of 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.

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Research from the Productivity Commission released last 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 Sydney, the average age has increased by two years to almost 40 since 2006. In the worst-off, the average is now just over 31, falling by a full year since the 2006 census.

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