The number of middle-income households in England is falling as the extremes of rich and poor rise – with London highlighting the divide

London has always been a city of extremes but the extent to which it has become polarised between rich and poor is laid bare in research that reveals a 43% decrease in middle-income households between 1980 and 2010.

England is increasingly divided between the rich and the poor, with a 60% increase in poor households and a 33% increase in wealthy households. This has come at a time – 1980 to 2010 – when the number of middle-income households went down by 27%.

But the trend is most marked in London, according to an analysis of census data by Benjamin Hennig and Danny Dorling of the School of Geography and the Environment at the University of Oxford. Over the three decades, the capital has seen an 80% increase in poor households, an 80% increase in wealthy households – and a 43% decrease in middle households. Around 36% of London households are now classified as poor (up from 20% in 1980), while 37% are middle income (down from 65%).

The largest percentage point fall in households in the middle has been in Westminster, which saw its middle reduce from nearly three-quarters of all households to just one-third.

The largest percentage-point increase in wealthy households has been in Richmond-upon-Thames, where more than half of households are now wealthy, compared with a fifth in 1980. In contrast, in Newham, almost one in two households is now poor.

The researchers have drawn up maps of England according to wealth, described by Dorling as “fancy pie charts”. The polarising of wealth has been exacerbated in recent years, with economic growth having been slower than had been hoped, and wages in the middle failing to rise in parallel with the recovery.

The economic divide between the beneficiaries of the property bubble and non-homeowners also continues to widen in the country as a whole, with upward pressure on land values.

Dorling said: “This analysis shows that England is becoming more polarised, with an increase in households that are poor and those that are wealthy. The number of households in poverty has jumped by 60% since 1980, meaning that now almost three in 10 are poor.

“At the same time, there has been an increase in the number of wealthy households – 33% in England and 80% in London. This means households in the middle are disappearing, leaving an increasingly divided country and capital. As more households have become poorer, and more people are unable to buy a home or get a mortgage, a small but growing proportion of other households have become very rich.”

Tackling the gap between rich and poor has become a major political issue. Labour leader Ed Miliband has called for a policy of “pre-distribution” to try to narrow the gap between the best and worst paid, while politicians from across the spectrum, including the mayor of London, Boris Johnson, have praised the idea of employers promising to pay the living wage.

The decline of the middle class since the 1980s has been noted across the UK and Europe, as the number of well-paid, middle-skill jobs in manufacturing and clerical occupations has gone down and the relative earnings for workers around the median of the wage distribution has dropped.

Mubin Haq, director of policy and grants at the independent charity Trust for London, which funded the research, said the findings should alarm all the candidates hoping to win the London mayoral election in 2016.

He said: “While there are staggering levels of wealth in London, many are also on the breadline. Too often the headlines are about the capital being the playground for the super-rich, which masks the increasing poverty that many face. In 12 of the 33 boroughs in London, the poverty rate doubled from 1980 to 2010. The net result of the growth in poverty and wealth is a big reduction in households in the middle. This is worrying for those who want a capital city that accommodates all diversities. Often we think about this in relation to ethnicity, but income is hugely important, especially if we want a city that functions and is fair.

“A significant factor is the cost of housing and our attitudes to property ownership in this country. To reverse these trends, we must build more genuinely affordable homes and make it more difficult for the wealthiest to buy up houses solely as an investment opportunity – a safe and affordable home is a basic human need that must be met.”

Dorling’s analysis of the housing market last month revealed average house prices in Oxford were more than 16 times the local average annual income compared with 15.7 times those in London.