In Sydney there are so many suburbs that have a median above $1 million, that $1 million dollars does not mean much anymore, unless you take that money overseas while the AUD is high.
Lets step back and think about what this means at a market level.
There are property millionaires all over Sydney and you would think that may be a good thing except it goes against the societal wealth ratios that have existed for millennia.
In the short term everyone is a genius, but where is this going in the longer term.
Is this a new market model?
It must be because I have never heard of it.
The warm and fuzzy property investor club.
There have always been a small percentage of wealthy, a reasonable amount of middle class that can grow and shrink considerably depending on economic conditions and political party influence.
And finally a significant amount of poor people.
Poor people are required so that wealthy people can generate wealth by leveraging capital and human effor using cheap labor.
The poor have always looked to climb the ladder to greater wealth and that desire will never change.
There have been many social and economic attempts to equalise conditions in society throughout history with the view that this will create a more peaceful and equitable society.
They have all failed.
Sydney residents have collectively come to the conclusion that holding wealth in land for the long term is a sure fire way to make money and preserve wealth.
What is interesting about the Sydney experiment is that even the poorest suburbs outlying Sydney are moving toward the 1 million mark rapidly, and soon this will replace the lower benchmark that $500K represented about 5yrs ago to entry level buyers for a free standing home.
Never in history has a method of sure fire wealth preservation been devised for the masses.
This is now "rational group think".
I was taught that markets that involved the two elements PEOPLE and MONEY always ends in speculation, asset inflation and deflation and capitulation.
Somehow the average Sydney property holder is now part of a rational investment crowd, each person looking at each other with a wink, the wink that says if we all hold and keep buying there will never be a property market fall.
This will be the first time in history that anyone with an ordinary job can generate wealth through property regardless of any qualification, just get a job, turn up and buy and hold.
We have broken the mould here in Sydney, a totally different breed of investor, a new system of gains and no loss.
Property price drops only happen to foreigners, and serves them right too for not being smart enough to buy in Australia.
Every market process involves periods of accumulation and distribution.
Depending on the nature of the market, these periods can take years or decades.
This process exists so that the rich can get richer.
The extremely affluent people of the world do not strive for social equality, they want to buy cheap and sell expensive, and that applies to all asset classes. The have absolutely no qualms about who they crush in the process, and it is always the masses that get hammered.
Redistribution of wealth occurs from poor to rich through crashes and market corrections.
The wealthy also know what a bubble looks like and are not afraid to rotate into a more profitable asset class when the opportunity arises.
I am not trying to make any predictions here, just pointing out what a unique property market situation we have in Australia.
