Sydney’s economic divides remain as stark as ever, with data showing the city can be split into four distinct zones: the uber-wealthy, the high incomes, middle Sydney and those on lower incomes.
Data from the National Institute of Economic and Industry Research also found that western Sydney residents were being hit harder by the cost-of-living crisis, with many local government areas in the region paying a higher percentage of their total incomes on necessities such as food, housing and utilities.
The data also indicates that many such residents were left with less than 10 per cent of their total incomes in savings at year’s end, exposing them to financial shocks.
In terms of total income, four economic groups emerge. The uber-wealthy, including those in Mosman, Woollahra and Waverley, with average household incomes above $250,000 and up to $400,000 in some areas. These areas spend about 14 per cent of that income on housing and save nearly 19 per cent of it each year.
The next group have high incomes – $200,000 to $250,000 a year – and encompass areas such as Lane Cove, North Sydney, Randwick and Hornsby. They spend an average of 17 per cent of their incomes on housing each year, and also save nearly 19 per cent.
Middle Sydney is the group that reflects how most of Sydney lives, with annual household incomes of $150,000 to $200,000. The group includes the Inner West, Sutherland, Canada Bay, Camden, Ryde, Burwood and Parramatta. People in this group spend about 17.5 per cent of their income on housing and save just over 15 per cent.
The final group – areas with the lowest average incomes in the city, under $150,000 – includes Penrith, Blacktown and Liverpool. These areas all spent more than 19 per cent of their incomes on housing and could save only 10 per cent a year.
Three of the hardest-hit LGAs were Fairfield, Canterbury-Bankstown and Cumberland, where residents have the lowest average incomes in the city but spend up to 9 per cent more of that income than the rest of the city on housing.
These areas have therefore felt the cost-of-living crisis more than the rest of the city, with bills and payments eating more of their smaller incomes.
KPMG urban economist Terry Rawnsley said the data offers a new way to look at the city: not divided by geography but by financial capacity.
How the other quarter lives: Mosman residents tend not to struggle to cover unexpected spending. Credit: Sam Mooy
“It’s less about clear lines on a map, and more about where those high-income, middle-income and low-income people are living,” he said.
Rawnsley also said much of the data indicates the wealth and prosperity of many areas is “tied up in the Sydney housing market”, with housing the largest contributor to financial duress.
The largest discrepancies across the city were in housing payments, in both real dollar terms and income percentages. In Mosman and Woollahra, where average incomes exceed $400,000, people spend less than 12 per cent of their income on housing.
Fairfield (26.7 per cent), Canterbury-Bankstown (23.26 per cent) and Cumberland (21.95 per cent) residents all paid more on average incomes below $105,000.
Across other necessities, such as food, health and transport, western Sydney residents paid more as a portion of their income. The region spent 8.35 per cent of income on food, 5.38 per cent on health and 9.98 per cent on transport, while the rest of the city averaged 7.88, 5.04 and 9.49 per cent, respectively.
Residents across the city were saving, on average, 15 per cent of their yearly income, with areas such as Ku-ring-gai, The Hills and Lane Cove saving more than 20 per cent.
By comparison, Cumberland (3.97 per cent), Fairfield (4.60 per cent) and Canterbury-Bankstown (5.42 per cent) averaged the lowest annual savings in Sydney.
To Rawnsley, this was a key element for understanding how the cost-of-living crisis had affected communities in western Sydney.
“It’s about the financial buffer people have against shocks,” he said. “If you are only left with around 4 or 5 per cent of your income after all spending, you’re obviously under financial stress. Any unexpected payment could create much more stress.”
The data is from 2023-24 and includes spending on alcohol, communication, recreation, eating out and other goods and services.
Neil Perry, chief economist at the Centre for Western Sydney, said the data revealed “barriers” that residents in western Sydney face and how the “barriers” restrain the region’s prosperity. An easy way out was to support job creation, he said.
“To lift incomes, people require more jobs, really good jobs that are accessible.
Liverpool residents need more jobs close to home. Credit: Wolter Peeters
“People don’t have the same opportunities as the people in the east. They might have the same skills, but they don’t have the same insider connections to get the same kind of jobs as people in the eastern core of the city. So their skills aren’t recognised or aren’t valued as much.”
Cumberland mayor Ola Hamed said the data had affirmed the experience of her constituents, adding that some have cut back on essentials.
“Cost-of-living pressures are having a devastating impact across our area, with residents cutting back on meals and avoiding going to doctors for treatment.
“Council remains committed to working with all levels of government, and I invite the prime minister, the NSW premier and all of their relevant ministers and MPs to come out to Cumberland to see the lived reality in our area.”
The Sydney Morning Herald has a bureau in the heart of Parramatta. Email parramatta@smh.com.au with news tips.
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