It’s a tale of two beaches. In 2014, I moved from Sydney’s Bondi to Melbourne’s St Kilda, and despite both suburbs having a boho, relaxed and party-going reputation, the differences were stark.

Bondi was on track to becoming the wealthiest suburb in Australia, and apart from the odd, unwashed backpacker, you could be mistaken for thinking you were in a sort of louche, rich person’s active wear commercial.

Walk to work from Bondi to inner-city Surry Hills through the posh eastern suburbs of Woollahra and Paddington and you aren’t so much walking through a city, as a demographic. White, healthy-looking, young, well-groomed – occasionally sporting accoutrements de jour like a small dog, Vespa or yoga mat.

St Kilda was a more interesting proposition: here was greater diversity.

The building across from my apartment was a beautiful, old Victorian house with a wide veranda owned by a church. Every evening at nightfall, homeless men would arrive with sleeping bags and bed down for the night.

There were other homeless shelters in my street (which was also a popular place for street-based sex work) and low-income housing. Around the corner was the Gatwick – a notorious boarding house where there was often broken glass or blood on the footpath out the front.

The shop at the other end of my street did $120 artisan cushions, another a brisk trade in overpriced Iranian grapes.

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At the local supermarket one might collide with a famous Hollywood actor who lived by the beach or a sweaty dude in the final throes of an ice binge.

Great wealth and great poverty coexisted in St Kilda in relative harmony.

Now I am back in Sydney’s east – and the Bondi boom continues. We’re relaxed, comfortable and utterly fabulous in Malcolm Land – Turnbull’s wealthy electorate of Wentworth that covers the southern shore of Sydney Harbour to Watsons Bay and down the coast to Clovelly and includes the elite suburbs of Bellevue Hill, Bondi Beach, Darling Point and Vaucluse.

According to an Australian Bureau of Statistics report released last week, Sydney has become Australia’s most unequal city, where 11.4% of all income goes to just 1% of residents.

This class of super-rich Australians can be found in Sydney’s CBD, the inner-city areas of Haymarket and the Rocks, and the eastern suburbs Rose Bay, Vaucluse, Watsons Bay, Double Bay and Bellevue Hill – places where more than 22% of all income went to the top 1% of earners.

The cliffs around the eastern beaches of Bronte and Tamarama are favoured eyries for Sydney’s banking and finance community, and high real estate price barriers and a lack of mixed housing means these areas are like gated communities in all but name.

You have to go all around the coastline to south Coogee and into Maroubra before you come across any significant pockets of public housing.

In his 2006 book Evil Paradises, Mike Davis edited a selection of essays examining spaces occupied by a super-elite – “phantasmagoric but real places – alternate realities being constructed as ‘utopias’ in a capitalist era unfettered by unions and state regulation. These developments – in cities, deserts and in the middle of the sea – are worlds where consumption and inequality surpass our worst nightmares.”

Think private islands, gated communities, towers rising out of the desert built by workers imported for the task, who sleep in shipping containers.

Sydney hasn’t had to construct vast gated towers for its richest residents – it has evolved naturally as an unequal place. There are vast swaths of poverty and low income in the regions and the western suburbs, while hugging the water, the eastern suburbs and parts of the north shore are places of fantastical wealth, undiluted by the poor and working class and those in government housing.

This is the way the cards have fallen in Sydney – but also how it has been designed. Take Claymore for example – 54km from the CBD and 95% public housing. Or Bonnyrigg or Mount Druitt – which has 42.5% public housing.

But it’s a different story in Melbourne, where a greater spread of public and social housing, including in gentrified suburbs such as Fitzroy, Carlton and Port Melbourne, and blue-chip suburbs such as South Yarra and Albert Park, has led to a more equal city.

Statistics from the 2006 census show the spread in Melbourne of social housing tends to be more even – avoiding the ghetto-effect, with Broadmeadows at 15.2%, Collingwood at 28.9% and Fitzroy at 19.6%.

Why is equality is important in our cities?

Greater diversity of rich and poor in the one area means better outcomes for all.

Take Melbourne’s Kensington. Seven kilometres from Melbourne’s CBD and well served by train and bus routes, it’s button cute – with a high street, some posh cafes, some not so posh cafes, and little worker’s cottages that you wish you had the foresight to buy in the 90s, as they now hit the million dollar mark.

With a population of about 10,000, it is home to a 6.5 hectare former public housing estate, now termed “a mixed tenure community” run by a private corporation, Urban Communities. It services low-income residents, including newly arrived asylum seekers, in 945 homes in highrise towers, low rise apartments and townhouses.

According to the recently released annual report by its management: “Across all domains the data outcomes showed that at least 82% of tenants either stabilised or experienced a positive increase since moving in to the communities we manage.”

Outcomes include “getting to know people, building a healthy lifestyle, making greener choices, feeling safe and learning and new activities”.

“After six months, and across all the different tenure types we offer, average outcomes for tenants moving into one of UCL’s communities are at a level comparable with tenants living in the private rental market. For social, affordable and public housing tenants this represents a significant improvement in general life outcomes.”

This is great news, and what public housing should be about – not just housing someone, but housing them in such a way that their life and circumstances improve. And maybe one day they won’t need public housing.

In Sydney, public housing in inner city areas is at risk. In 2014, public housing in Millers Point was controversially sold. The state government announced the sale of nearly 300 properties and said with the proceeds it would build new homes further out – in Sydney’s south-east and south-west, the Illawarra region and the Blue Mountains.

One of the Millers Point homes was auctioned for a record $4.2m.

Eamon Waterford, strategist for the Committee for Sydney, tells Guardian Australia: “We [in Sydney] do have a whole heap of social housing tied up in estates where there are 40% to 50% of dwellings being government housing” and “there’s a lot of research that shows all different groups on our society – low, middle income and high income have a better life if they live in a mixed community.”

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He advocates “salt and pepper” housing – that is, a mix of social and government housing spread throughout Sydney, rather than housing concentrated in big estates.

“Macquarie Fields, Bonnyrigg, Waterloo and Surry Hills, these are prime examples of places that don’t deliver benefits to the community. You’d see better mobility in Surry Hills than in a less connected area,” he said.

But within the 400 units of social housing “you are regularly living next door to people with mental health issues, the police visit every day and you are living in a community where there’s not much aspiration. There’s not necessarily a culture of working, there’s inter-generational unemployment. It’s really important to grow up with role models. If you live in Claymore and you apply for a job – then you have Buckley’s chance of getting a job because employers discriminate when they see the address. Can you see your friends, get into the city, get a job, if they don’t live in the right places?”

Sydney – particularly those parts where the richest live – is full of wild beauty. Beaches, harbour coves, houses poking up through native gardens noisy with bird life, and perched on cliffs.

But there’s something sterile about seeing only one type of person walking the streets (if they are out walking at all), something that doesn’t feel right.

And the less poverty you see, the more likely you are to convince yourself it doesn’t exist.