In the last 20 years, the whole country has got richer. But what about the pecking order? Has that changed? In our status-hungry brains, the question matters.
Sometimes someone looks down their nose at your suburb. Is that still deserved? Or if you’re impressed by someone’s address, could its glitzy reputation be out of date? Impressions can well last longer than reality.
Cities change over time. Gentrification sweeps across former working class suburbs, and they fill with people who would once have been called yuppies. As those suburbs rise in relative income, others must fall in relative terms.
Also by Jason Murphy:
Similarly in rural Australia – mining regions get rich and certain coastal areas become fashionable. Byron Bay and Karratha fill with the very wealthy, other parts of Australia must lose their sheen. But where? How does the pattern work?
And can you use this information to buy a perfect house in a part of Australia that is suddenly unfashionable but actually still lovely? Or perhaps figure out which area will be the next to welcome a stampede of eager high-earners?
Let’s start by looking at Australia overall. The biggest risers are rural, like the chunk of Tasmania’s west Coast around Granville Harbour and Zeehan, or the suddenly wealthy mining area of Springsure in Queensland.
The area in Tasmania has climbed 56 pegs in the percentile ranks of median taxable income, while the Queensland zone has risen as astonishing 68, taking them from near the bottom to near the top. Meanwhile the big fallers are mostly in the cities.
Wait, how does this analysis work? Here’s how: I calculated the median taxable income for each postcode for 2003-04 and 2019-20. Then I give each postcode a ranking at each time point.
So the top ranking is 100, (it includes a bunch of postcodes that touch Sydney Harbour), while the bottom ranking is 1.
Postcodes move rank over time! If a postcode’s median income rises from rank 50 (richer than 50% of Australia) in 2003-04 to rank 60 in 2019-20 (richer than 60% of Australia), their change would be +10, and they’d show up pale yellow on the map above.
Areas in blue are going the other way. It doesn’t mean they’re getting poorer in dollar terms, just that other areas are getting ahead of them faster.
Let’s look at the country’s biggest city. Two areas have risen the most. One is in the outer north-west of Sydney: a postcode encompassing Box Hill, Vineyard, and other suburbs on the fringes of the Hills District. The other is in the heart of the inner-west: Marrickville, home of Prime Minister Anthony Albanese. Both suburbs were around the 60th percentile for median taxable income in 2003-04, but by 2019-2020 they were riding much higher, at the 87th, a major lift up the gentrification scale.
Melbourne, like Sydney, has a middle ring of suburbs that have declined in median income, and some gritty areas that have come up in the world. The eastern suburbs – once the be-all and end-all of Melbourne social status - are now home to many lower earners, while the north and inner west are ascendant. (nb the suburbs at the absolute top of the distribution, like Melbourne’s Toorak, are getting a lot richer, but in rank terms not changing at all because there’s nowhere to go when you’re already at the highest ranks!)
The story of Box Hill, in Melbourne’s east, explains how some of these suburbs came to fall in terms of median income. Box Hill was once a normal suburb, albeit blessed with a lovely shopping centre, a hospital, and excellent transport. What happened next? Development. Census data tells us Box Hill had very few apartments before 2003-04. By 2021 it had nearly 4000 - more apartments than separate houses. That drags down median income significantly. (The same applies in Melbourne’s CBD, and, as we will see, other Australian CBDS too.)
The original residents of Box Hill are hardly disadvantaged in this scenario – the value of their (usually large) blocks of land is through the roof. Neighbours are teaming up to make larger parcels of land available for apartment developers, and reaping huge rewards.. Those who stay enjoy the amenity - the extra custom from the apartment towers has caused the already strong restaurant scene to flourish further. But saying you live in Box Hill no longer carries the same message.
Development is part of the story of who rises and falls. But it is not the whole story. The changes are also about geography – the suburbs that are falling are adjacent, and so are those that are rising. Many of those rising suburbs are also seeing apartment development (although rarely to the extent seen in Box Hill). It seems there are fashions in cities – wealthy people move to one part, then later to another.
In Adelaide, Brisbane and Perth we see similar patterns: blocks of adjacent middle suburbs falling while a handful of outer suburbs rise up the ranks. The CBDs are in each case getting younger, lower income, but more diverse and more vibrant.
The wrap up: follow the trends or get ahead of the pack?
The question you have to ask yourself, if you’d like to buy in an average suburb and watch it gentrify around you, is whether you think the trend away from those middle suburbs has gone too far. Are they due for a comeback?