The Price Children Pay for Exclusive Suburbs

Alan Kohler has observed that “education and hard work are no longer the main determinants of how wealthy you are; now it comes down to where you live and what sort of house you inherit.” New South Wales Treasurer Daniel Mookhey echoed this, warning that having property-owning parents is beginning to matter more than getting a degree.

Housing affordability problems also risk an unfortunate cycle of increasing disadvantage: families cannot afford a home, they are pushed out to areas far from higher-paid jobs, their children go to schools isolated from more privileged peers, and they have less educational attainment as a result.

Australian cities have long restricted housing density in wealthier established suburbs. Allowing more supply of housing in these areas could not only improve affordability for families, it could also reshape educational equity by diversifying the neighbourhoods around our schools. 

A growing body of research shows that where children grow up can have a causal impact on their life outcomes. In the United States, groundbreaking studies by economist Raj Chetty and colleagues found that children who moved from a low-income neighbourhood to a higher-opportunity area before age 13 were more likely to attend university and have substantially higher future earnings. The children were also likely to live in better neighbourhoods as adults. These findings suggest that efforts to integrate disadvantaged families into mixed-income or more affluent communities have causal, lasting effects.

Australian data paints a similar picture. Economist Nathan Deutscher, replicating Chetty’s approach, found similar causal effects of place, even though Australia has less economic inequality than the United States. Deutscher found that children who move to a new neighbourhood have outcomes matching other children in that area. Earlier moves to higher-opportunity areas are linked to better outcomes.

Why does location have such power? One answer lies in peer effects and social networks. Affluent neighbourhoods often mean access to a web of connections and expectations that pull kids upward. Schools in mixed-income communities can help facilitate friendships across class lines. Chetty’s recent research on social capital—drawing on 72 million Facebook friendships—found that the single strongest predictor of a community’s upward mobility is the degree of “economic connectedness”, or friendships, between low-income and high-income people. 

In Australia, parents are much more likely to choose a private school compared to the US.¹¹1

Despite this difference, Deutscher found the same outcomes in Australia as Chetty’s research in the US. It is likely that lower-income children in Australia get the benefit of peer networks in a more affluent community regardless of whether they go to government or non-governmental organizations schools, because either way they are interacting with peers from a higher socioeconomic background. 

Communities where poor kids have more high-income friends tend to have much higher rates of those kids climbing the income ladder in adulthood. Conversely, places with stark class segregation—whether by neighbourhood or by school—see mobility stall.

For Australians watching our own housing markets tighten and education outcomes diverge by suburb, the research on social mobility poses a question: how can we improve the geography of opportunity?

About a 35-minute drive northwest from Melbourne’s CBD, past the airport, there is a viewpoint area where people gather to watch the planes fly.  If you keep driving north, you’ll be out of the city and into farmland. And if you keep driving, for about 15 minutes more, past the calm fields and kangaroos, you will suddenly enter a suburb full of traffic and brand-new compact houses. This is Craigieburn, a sprawling growth area suburb that barely existed a generation ago. In 2001, Craigieburn’s population was just over 15,000; by 2021, it had exploded to more than 65,000. 

Housing estates are being built so rapidly that infrastructure struggles to keep up. Young families flock to new subdivisions for affordable house-and-land packages and start looking for nearby schools, most of which have to be built new. 

Elevation Secondary College is a new public high school established in Craigieburn’s growth precinct.²²2

When Elevation opened its doors in January 2020, it began with just 146 students in Year 7. By 2024 the school’s enrolment had grown to 970 students across years 7–11, and it will see its first Year 12 graduates at the end of 2025. Elevation’s student body reflects the demographics of a booming outer suburb. The school scores in the 32nd percentile of the Index of Community Socio-Educational Advantage - which means it is below the average Australian school in socioeconomic profile. Just under half of students are in the bottom quarter of the distribution of socio-educational advantage. About 80 per cent of students have a language background other than English.

Elevation Secondary College is led by exceptional educators who have implemented an evidence-based teaching model that is rare in secondary school contexts. The school leaders opened the school with the goal of making a significant positive difference to student outcomes in a disadvantaged area of Melbourne. But even with the strong leadership, it is difficult to operate a new school in a fringe growth area. Staffing has been particularly challenging because the commute is so far for many teachers, and because the school has grown so rapidly each year. It is also difficult to connect students and families with other social and community services, because there are not as many options as there are in established suburbs. 

Outer growth areas (also called greenfields, outer suburbs, or fringe suburbs) are known for being more affordable places to buy a family home. They also come with downsides. A 2024 report found that residents in outer metropolitan growth areas have 21 per cent less access to schools than people in inner established equivalents. By nearly every measure, from GPs to public transport to playgrounds, these fringe communities start out underserved.

Another report showed that jobs in professional services are under-represented in growth areas compared to Australia as a whole, and a smaller share of people in these areas are in high paying jobs. Of those residents who are in higher paying jobs, many have to commute to get access to these jobs.

Growth areas also have higher unemployment rates. In September 2022, growth areas had an average unemployment rate of 4.9 per cent compared to the Australian average of 3.9 per cent. Education qualifications are also lower in growth areas. In 2021, About 24 per cent of growth area resident workers aged 15-69 had a bachelor’s degree or higher, compared to 31 per cent for Australia as a whole. 

Growth areas are culturally diverse. In 2021, 29 per cent of residents spoke a language other than English at home, above the national average of 22 per cent. There are notably higher proportions of residents speaking Indian, Arabic, Filipino, and Pakistani languages compared to the national average. Growth areas had more international migrants between 2001 and 2015 than Australia overall.

In short, outer suburbs tend to have fewer services and jobs, higher unemployment, and a population that, while diverse and aspirational, has fewer residents with higher education. All of these are factors that can adversely affect educational opportunities for local kids.

Across Australia, these outer suburbs are exploding in population, while many of our established suburbs are highly restricted from adding new housing. The outer fringe is bursting with many high-need, high-diversity school communities, serving recent immigrants and working-class Australian families trying to get ahead. At the same time, schools in our wealthy established suburbs, where few new homes are allowed, are shrinking in student enrolments.

Melbourne’s outer fringe suburbs may be unequal and isolated, but if they did not exist, the city’s housing affordability problem would be catastrophically worse. These growth areas have an important role in Melbourne, making up for the lack of housing supply in the established areas. Sydney has a much bigger housing affordability problem, and not surprisingly, greater socioeconomic segregation in the city. 

Sydney is sometimes described as the city with no grandchildren, which is a phrase that captures the growing anxiety over its demographic and economic future. Soaring housing costs have made it increasingly difficult for young families to stay, let alone start, in the city. Many adult children of long-time residents are unable to afford homes anywhere near where they grew up, forced instead to relocate to distant suburbs or entirely different regions. As a result, the social fabric of many inner and middle suburbs is ageing rapidly, with fewer children and fewer new families.

Sydney also exhibits some of the starkest socioeconomic segregation in Australia, with a pronounced east-west divide that has been widely documented by urban researchers, and dubbed the ‘latte line’.³³3

Affluent suburbs dominate the city’s northern and eastern stretches, where access to high-paying jobs, various amenities, and efficient public transport is concentrated. In contrast, the city’s western and southwestern suburbs are home to a greater share of lower-income households, recent migrants, and blue-collar workers, many of whom face longer commutes and fewer local employment opportunities.

Sydney’s spatial segregation is more severe than Melbourne’s. Research by the University of Sydney has shown that income and job access are more unevenly distributed in Sydney, with wealth and advantage tightly clustered in select postcodes. 

Researchers have analysed ‘neighbourhood porosity’ across Australia, defined as the extent to which a neighbourhood has a supply of affordable rental housing opportunities that allow lower-income earners ongoing entry over time. Across all Australian cities, Sydney had the highest level of exclusion and the least neighbourhood porosity.

It is easy to see the socioeconomic segregation in the schools. The schools in Sydney’s west have a much higher representation of students from the bottom quarter of the distribution of socio-educational advantage. 

For example, Liverpool Girls High School in South West Sydney is 20th percentile on Index of Community Socio-Educational Advantage (ICSEA), with 59 per cent of students from the bottom quartile of the distribution of socio-economic advantage. 91 per cent of the students are from a language background other than English. 

On the North East side of Sydney is Northern Beaches Secondary Girls College. This school is 88th percentile on ICSEA, with only 6 per cent of students from the bottom quartile of the distribution of socio-economic advantage (46 per cent are from the top quartile). 30 per cent of the students are from a language background other than English. 

Stroll through the well-heeled streets of Brighton in Melbourne, or Mosman in Sydney, and you’ll find heritage mansions and manicured parks, but fewer prams and schoolbags than there used to be. Demographers have noticed a steady ageing-out of these suburbs. Young families find it nearly impossible to buy in, so the population of children declines as the incumbent residents grow older. Add in falling birth rates and smaller family sizes among the wealthy, and you have a recipe for school enrolment collapse in some highly affluent postcodes.

An example is Kambora Public School in Sydney’s Northern Beaches. Located in a serene, high-income area on the edge of Ku-ring-gai National Park, Kambora was once a thriving small primary school. But since 2018 it has lost more than 200 students, plunging to just 41 children enrolled in 2025. Parents now fear the school may face closure.

In Melbourne, a Templestowe Catholic primary school dropped from 221 students five years ago to just four by early 2025, forcing closure due to under-enrolment. The affluent suburb saw a 15% decline in the total population of children from 2001 to 2021. Across Sydney and Melbourne’s exclusive belts, similar trends are at play.

ABS projections and independent analyses forecast a drop in school-aged children in many elite suburbs. Toorak in Melbourne may see a 22 per cent decline in children over the next 15 years. The areas of highest decline in Melbourne and Sydney will be in many of our wealthiest areas.

The drivers are the aforementioned combination of low housing turnover, planning restrictions against new development, and older affluent homeowners staying in their family homes as they age. When newcomers do manage to buy in, they tend to be wealthier professionals having fewer children and having them later, further reducing the cohort of local kids at any given time.

For the local schools, this demographic drought is challenging. Australian public schools are funded on a per-student basis, with extra weightings for disadvantaged students. That means some of the government schools in the wealthiest areas end up among the lowest-funded, because they have smaller enrolments and fewer students attracting extra funding. A school set up for 300 kids will struggle with budget if the number of students is halved. Teacher counts may be reduced, the breadth of curricular offerings may shrink, combined classes may become the norm, and parents may understandably start to wonder if they should choose an alternative school.

There is of course a huge opportunity here: these under-filled schools could benefit from many more—and more diverse—children living in the area. A mix of backgrounds tends to lift the outcomes of lower-SES students without harming higher-SES peers, and more students can improve the school’s budget. The biggest obstacle to overcome is the rules that restrict more diverse housing types to accommodate diverse families from being built in the first place.

Melbourne’s CBD and inner suburbs have seen a surge in families with children, a demographic shift largely driven by planning reforms in the 2000s that allowed higher-density residential developments. These planning changes have unlocked a wave of new housing, particularly apartments, allowing more families to move in. As a result, areas that were traditionally seen as not family-friendly now host significantly more children.

The growth in apartments near the CBD has already filled up local schools. Docklands Primary School, which opened in 2021, was already at capacity by 2023. It now has a second campus at the nearby shopping centre to manage the growth in numbers. South Melbourne Primary School, based in Southbank, opened in 2018 as one of the first high-rise state schools and is also near capacity with about 440 students. University High School, the main secondary school zoned to the CBD, is struggling for space and currently renting a CBD building as a Year 9 campus.

All of these schools are seen as excellent schools, some award-winning, with high demand from families. The families who moved to the CBD and whose children attend these schools are mostly affluent, often from high-skilled immigrant backgrounds, and many living in apartments. The success of Melbourne’s CBD planning reform shows that it is possible to attract many families to denser homes. These families otherwise would have found a home in an established suburb, pushing up rents and forcing families with less purchasing power further out.

New Zealand also provides examples of how allowing more housing can attract more families with children. In an inner-Christchurch neighbourhood where townhouses have been built en masse after zoning reform, the number of occupied dwellings jumped 33% and the child population rose 45% in the same decade. Meanwhile in the suburb of Devonport, which has strict heritage controls restricting new housing, almost no new housing has been built in decades. Not coincidentally, the number of children under 15 in Devonport fell by nearly 40% in the past 10 years, and local school rolls have plummeted.

Of course, allowing more families means we have to also ensure schools in high-demand areas can readily accommodate growth. But building new schools in established suburbs can sometimes face fierce local resistance.

If Australia is to successfully integrate communities and improve equity, school infrastructure needs to be more responsive to population shifts. 

Australian states are often caught reacting late, waiting until local student numbers are overflowing before funding a new school, which then takes years to complete. Inner cities struggle with land constraints, but in Australia’s outer suburbs, rapid population growth also often outpaces the provision of new public schools. In greenfield areas, it is common for new housing estates to wait years for a promised government primary or secondary school to be built, leaving families with long commutes or temporary facilities in the meantime.

One issue is land and construction costs, especially in inner urban areas. Traditional low-rise schools need a decent land footprint, which in a place like Sydney’s North Shore or Melbourne’s inner east can cost tens of millions for a few acres. In recent years, the solution has been “vertical schools” which are multi-story school buildings that stack classrooms and even sports facilities upward. Vertical schools make smart use of limited urban land, allowing cities to build new schools in central, high-density areas where traditional campuses wouldn’t fit. As cities grow denser and land prices rise, vertical schools offer a solution to ensuring every child has access to a well-located public school.

Australia has begun opening a few such schools: for example, Arthur Phillip High School in Parramatta, Western Sydney, a public high-rise campus that soars 17 storeys. It opened in 2019 at an eye-popping cost of about $225 million. It was hailed as an innovative answer to land scarcity, but also raised eyebrows as perhaps the most expensive school per student in the country. The NSW Education Minister later remarked that vertical schools were “no longer a preferred option” because they are expensive, complex to build, and can be less adaptable in use.

Yet vertical builds are common in other dense cities. Singapore and Hong Kong have 6–12 storey school designs, often with rooftop courts and community facilities, to maximise tight sites. Adopting more design standardisation can help reduce costs. Since the 1980s, Hong Kong built most public schools to a few repeatable layouts to economise on design and construction. The “Year 2000” standard design in Hong Kong, for instance, created 30-classroom schools on very tight sites by exceeding normal height limits, stacking facilities upwards while still providing essential open play areas on roofs and podiums. Similarly, during the post-war period, Singapore created five standard school designs with multi-storey buildings to maximise land space.

Modular building, which involves fabricating sections of classrooms off-site in factories and then assembling them on-site, can help speed up the process of building a new school. The Victorian School Building Authority has adopted modular construction for over 100 school projects, reporting that this process can cut up to half the time needed compared to a traditional build.

Victoria has also used Public-Private Partnership (PPP) models to more rapidly deliver new schools. In this model, the private sector finances, designs, constructs and maintains the new schools over a 25-year period. The State retains school ownership and responsibility for delivering educational services. 14 new schools across 12 sites were delivered in two years under the PPP program for $317 million.

Regulatory and bureaucratic efficiency cannot be overlooked. To build schools faster, simplified approval processes are needed. In many high-growth cities, school construction is treated as critical infrastructure with priority planning status. Urban planning processes in Australia allow ample opportunities for objections, appeals, and political vetoes. New schools, like new housing, often face NIMBY opposition.

A telling saga unfolded in Brisbane’s inner-west recently. In 2021, the Queensland government announced a bold plan to build Brisbane’s first vertical primary school to accommodate 900 students. However, the plans have not really progressed, and the most recent revised target is to open in 2028-29 (the original promise was 2024). 

The first site identified for the new school, near the Indooroopilly State High School, was ditched after local resistance. Residents raised concerns about traffic congestion and parking shortages, loss of green space and residential neighbourhood character. Residents formed a group called ‘Stop School 5’, referring to the number of schools in the area. A petition to abandon the plans generated over 1,500 signatures. The government abandoned the plans.

An alternative site was then put forward by the government: the former Toowong Bowls Club. This site was already publicly owned and centrally located, appearing to tick many boxes. The community opposition flooded in as soon as it was announced. This time the concerns were about potential flooding as well as endangering a nearby flying fox colony. A new petition was started to axe the bowls club plans and revert to the plans for the Indooroopilly State High School site. Despite the fact that the site is in an established suburb of inner west Brisbane, the petition writers expressed fear for the flying foxes:

Negative impacts from construction, and ongoing light and noise pollution once the building is in operation will cause bats to become highly stressed, in turn this can cause the flying foxes to become sick.

It received 1,685 signatures. The government ditched the plans.

At the same time the government also said that changes to federal laws protecting koalas meant land earmarked for a new secondary school in Park Ridge could no longer be used.

This drawn-out saga reveals the deep challenges in building new schools in Australia’s inner cities. Urban land scarcity clashes with community expectations around school size and form. The Brisbane school is not alone in facing community opposition:

• In Adelaide, an expansion of Adelaide Botanic High School onto protected Park Lands sparked a high-profile dispute blending community, council, and heritage concerns
• A promised new high school in the regional New South Wales town of Bungendore was delayed for four years because of community concerns and legal challenges
• The expansion of a primary school serving Melbourne’s CBD faced delays from neighbour objectors and Heritage Victoria, fearing the four-storey addition to the school would “harm the cultural heritage significance of the place”
• In Perth, a plan to build the first new public primary school in the CBD area in over a century led to a high-profile standoff between the state government and the City of Perth. The council unanimously voted against the school plan, and the state had to introduce special legislation to forcibly acquire the site

NIMBY resistance can stall even well-funded and strategic infrastructure. Delays in decision-making undermine confidence in government planning, even as enrollment pressure mounts.

Every community grapples with change, and it’s understandable that objections arise when our neighbourhoods begin to look or feel different. But while concerns about development should be heard, we cannot let them override the responsibility to provide schools for the next generation. Schools are not optional extras, they are essential infrastructure, just as vital as roads or hospitals. To delay or block their construction is to compromise the future of our children and deepen existing inequalities. Ensuring every child has access to a great local school must be non-negotiable.

Importantly, socioeconomic integration for families doesn’t only mean moving poor kids to rich areas. It also means keeping housing stable for those already in established areas as the city’s demographics change. Melbourne’s plans to demolish and rebuild 44 public housing towers has the potential to disrupt schools that serve those areas. Planning for the interim housing for those families is still uncertain, and the local schools, in some cases, are are made up mostly of children  living in those towers. It is possible that this presents an opportunity to integrate more affluent children in those schools, but there is a major risk of losing the students who are already going to school there. 

Although the housing commission flats are in affluent suburbs, there can still be a high degree of isolation for the families that live there. Research shows that it would be beneficial for those children to have more friends from higher socioeconomic backgrounds. A 2012 US study tracked 850 children whose families were randomly assigned to various public housing in different neighbourhoods. The children assigned to low-poverty neighbourhoods, and schools with middle-income or affluent students, performed better than their peers.  According to the study’s author: 

Low-income students attending lower-poverty elementary schools (and living in lower-poverty neighbourhoods) significantly outperform low-income students who attend higher-poverty schools with state-of-the-art educational interventions.

In Melbourne, Fitzroy Primary School provides a useful example of recent integration of higher socioeconomic peers into a school that serves housing commission flats.  The school is surrounded by new apartments which have brought new, often more affluent, families to the area. In 2019, around the same time many of these new homes were being completed, the school decided to begin a bilingual French program. This program attracted many of the area's newer and more affluent families, and the school's demographics shifted as a result.  In 2019, only 6 per cent of the school’s students were from the top quarter of the distribution of socio-educational advantage. In 2024, the top quarter had grown to 27 per cent of the student body. The total enrollment grew from 108 students to 219 students over that same period. If the research base is correct, this demographic shift could have a large benefit for those students from disadvantaged backgrounds. 

In a similar vein, building more social housing units in inner suburbs and providing rent assistance to lower income families are both important strategies for ensuring families can move into neighbourhoods they would otherwise struggle to afford. This is particularly important for families with children in primary years or younger, as the research says that moving later in the teen years is not as effective for changing peer connections and life outcomes. 

Australian cities like Sydney and Melbourne have always thrived on openness and egalitarian ideals. That can feel distant amid today’s housing affordability crisis. The solution lies in making sure our communities can continuously evolve: instead of closing to entrants and asking them to establish new and separate suburbs, we can invite them into the broad, diverse communities that already exist in our cities.   

To create an equitable future, it is essential to open up the geography of opportunity across Australia. Melbourne is already planning to reform planning rules in the wealthy suburbs to allow more  housing diversity. This approach is promising and well-justified by the evidence. Lower-income families will have a greater chance to build social networks with more affluent families. Established communities will gain more children and be able to have full, diverse, and well-funded schools. This will reduce the need to continuously sprawl outward, ensuring fewer families will be isolated on the fringes. The evidence is clear that when families can move into better neighbourhoods, their kids benefit immensely.

The suburbs that once guarded their advantages should open their doors, becoming neighbourhoods where opportunity is truly shared. Allowing more homes on a quiet street or adding new schools to our existing neighbourhoods are small changes that make way for a more integrated future. One where children of all backgrounds grow up together, learning from the city and from each other.