Last year, many investors earnt more from a single property than most folks earn in a year. The game is still heavily rigged to favour the elites and those who own land, but there are doors open to us now that previous generations could only have dreamt of.
Some people made 100 grand this year, and they didn’t do a thing.
Sydney house prices are up about 15% over the past year. On a median house price of about $680,000, that’s a very tidy $100 grand in the pocket.
How much did you earn last financial year? How hard did you have to work for it?
Nice work if you can get it hey? And some people probably pocketed a lot more.
Property Baron Harry Triguboff for example was laughing into his chardonnay:
“I’ve had land that has doubled in value in the past 12 months,” he said…
Again property is delivering massive wealth to those who bought well – or those who simply found themselves in the right place at the right time.
And property is still the wealthy elites investment of choice.
Apparently the total value of property on this year’s BRW Rich List is $16 billion. 53 of the 200 people making up this years rich list made the majority of their money from property.
Think about that for a sec. More than a quarter of the richest people in the country have made their fortune through property.
Of course not every individual property is a winner, and you have to buy well – in any market. But property, like nothing else in human history, is the maker and breaker of fortunes.
Go back to the mother land and the same story is being played out there.
Property prices in land-constrained London are up 19% over the year. That’s a very tidy £71,000 a year – almost double the average post-tax income for Londoners!
Sure beats working right?
Property continues to build enduring legacies of wealth. Of the 5 richest people in the UK, one is a duke and the other is an earl, both of who had the great fortune of being born to grand-daddies who owned half of inner London.
Like the old joke goes…
I owe my fortune to some advice my father gave me – Here’s a million bucks. Don’t lose it.
Or in this case, here’s a quarter of London. Don’t spend it all at once.
As if you even could.
The world isn’t fair. Only Hollywood pretends that it is. Human history is the history of powerful folks screwing over anyone they can, through endless time (though the optimist in me sees the pockets of human generosity and selflessness, but these are isolated burrs in the fabric of time.)
And the primary mechanism for entrenched inequality and power imbalance is the ownership of land. Always has been. Hungry empires expanded on the desire to control more and more land – and the resources and ability to create wealth that came with them.
But I reckon we’re slowly and steadily seeing a ‘democratisation’ of land, and with it, power. (ok, that’s the optimist in me speaking again, but hear me out.)
The King of England used to own everything. His power was absolute.
Democratic revolutions diluted this power, but only partially. If you were part of the ‘landed gentry’ – the lucky ones who owned land, then you got a voice in the new political system. If not, tough titties. If you were a woman, forget it.
The intention was always to relinquish as little power as possible. You paid lip service to noble ideals like democracy, but you had no intention of actually giving poor people a chance.
And if you owned all the land – and the ability to create wealth – who cares if people got a vote (to symbolically choose between Tweedledum and Tweedledee every four years)? They were still poor and poverty kept them under control.
Systems of tradeable land rights were set up, but I don’t imagine the elites of the time ever thought that plebs would actually ever accrue enough wealth to be buying land for themselves.
Who saw that coming?
But the industrial revolution changed the game completely. By the end of the 20th Century, even the poorest folks in developed countries could actually save money if they wanted to. And with those savings, and with a financial system opening up more and more, anyone could become a landed gent if they really wanted to.
The riff raff was rising up.
This is my story. This is Mark Rolton’s story. This is Dymphna’s story. We were never supposed to make it old boy’s club that was once wealth, but the system got out of control.
Sorry old boy, I’ve accidently bumped your Mercedes with my Datsun.
The system created unintended opportunities for folks like us, and we made hay while the sun shone – we used the system to our advantage.
And while the system accidently left a few doors to wealth open, it’s still heavily rigged in favour of folks who own land. Look at negative gearing, tax concessions, the political establishment’s iron-clad commitment to stop house prices falling. All of these are designed to protect the wealth of the wealthy.
We use these to our advantage too.
But as much as I wish it was, it’s not a one way street. Banks and the mega-rich have used a GFC which tipped millions of American’s into insolvency, to gobble up foreclosed properties. I’m they’d do the same here if given half a chance.
But while it ebbs and flows, I see more and more “ordinary people” (though I’ve never met an ordinary person) accessing the levers of power – land. This is the democratisation of power that I’m proud to be a part of.
The system is still rigged, but we live in an age where, if we’re plucky and smart enough, we can find ourselves in the old boy’s club of wealth…
… with our dirty sneakers up on the Italian leather sofas.
Brave new worlds.