How Wealth Moves Out of Downtown

It’s been a similar story north of the CBD. Abbotsford is now ranked Melbourne’s ninth-richest suburb, with a median weekly income of $1,354 in 2021, up 58% from $855 in 2011, when the suburb was in 30th position.

Preston has also grown rapidly. In 2011, Preston West’s typical income was below the median for metropolitan Melbourne at $560. But over the decade, as increasing numbers of working professionals moved further afield, median weekly earnings jumped 61% to $902.

The rise in wealth was almost as rapid in Northcote, a suburb that has seen soaring house prices. In Northcote – West, the median income is now $1,216, an increase of 62% from 2011. In Northcote – East, the median income jumped 55% over the decade to $1,130.

“Northcote is the beacon child of gentrification,” said Glenn Capuano, demographer at ID Consulting. “Northcote has well and truly gentrified.”

He said the characteristics of gentrification included an area becoming unaffordable for low-income people, an increase in average income accompanied by a similar increase in tertiary qualifications, and sometimes a decline in an area’s cultural diversity.

Footscray and Yarraville were also suburbs showing similar signs of gentrification, he said. Wealth has also grown rapidly in Thornbury, with median weekly income rising from $641 in 2011 to $1,041 in 2021, a 62% increase.

But increases in median income in inner-city suburbs tell a more complicated story than first appears. In many areas of central Melbourne, large numbers of low-income students and backpackers have moved out because of the pandemic, and their absence has caused median incomes to rise accordingly.

Urban architect Andy Fergus said Melbourne, like other Australian cities, had seen a ripple effect, where rising house prices and strong population growth had pushed people further.

He said suburbs such as Preston, Reservoir and Brunswick to the north, and Footscray, Seddon and Yarraville to the west, were becoming increasingly expensive, but public investment had not kept pace.

“Unlike in the past, where once we saw land values ​​rise as a result of high public investment and public amenities, we now see private investment surging long before public investment and local councils are struggling to follow,” he said.

University of Melbourne urban geographer Kate Shaw said a significant consequence of gentrification has been the displacement of low-income people, who have been pushed even further, often without access to networks or services of social support.

“There needs to be much greater investment in social housing and community housing, and social facilities and services in those areas,” she said.

The once working class suburb of Collingwood now has Melbourne’s 14th highest weekly individual income at $1,338. This represents a whopping 80% increase since 2011, when the median weekly individual income in Collingwood was $742 and the suburb ranked 65th.

Upscale apartments in Collingwood’s former working-class neighborhood attract high-income residents.

Fergus said Collingwood had seen a boom in apartment building with a focus on an “upscale” clientele.

“While Fitzroy has seen a more gradual increase in wealth since probably the early 1970s, Collingwood has gone from a working-class neighborhood to an ‘upmarket’ location on the outskirts of town in a very short time.”

Further parts of Melbourne, around 10 kilometers from the CBD, have also seen rapid growth in wealth. In Carnegie, to the south, the median individual income rose from $652 in 2011 to $1,011 in 2021, a 55% increase. In Oak Park, to the north, the story was remarkably similar. Median income is now also $1,011, up 62% from $623 ten years earlier. And in Heidelberg West/Rosanna in the east, the median is $1030, a 55% increase over the past decade.

Capuano said the Oak Park increases were linked to increased affluence in the Essendon area, while for Heidelberg/Rosanna he said new high-density housing and improved neighborhood jobs of the Austin hospital may have led to some gentrification.

Economist and planner Marcus Spiller said the process of gentrification is linked to a dramatic transformation of Melbourne that has been underway since the late 1970s, with a shift in focus from manufacturing to services such as finance, banking, insurance and law.

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He said this had led to a larger group of people wanting to live in the city, where there was a concentration of well-paying jobs.

“What we’ve seen over the past 30 or 40 years is that traditional working-class suburbs are getting wealthier,” Spiller said. “Places like Brunswick, Northcote, Footscray, which were once blatantly working class and moderate to low income, they’ve enlarged the charts in terms of middle income…purely because of access to the honeypot well-paying jobs in the central city.

Spiller said wealth was likely pushed back further by the pandemic, which allowed more professionals to work from home.

“We’ve kind of stimulated that process to the point of even seeing it create hotspots in regional areas like Ballarat, Bendigo, Castlemaine,” he said. “So now it’s possible to cling to the high-paying economy downtown, but live your life somewhere else.”

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