That same sort of thing happens in Australia, especially for coastal and beachfront properties. Where property was really cheap because it was far from major centres ended up getting really expensive over time. The only difference here is that those people tend to be squeezed out when they can no longer afford to pay the council rates (local taxes based on the value of the property). So they have to sell up, make a lot, pay a lot in income tax, and move somewhere far cheaper.
There is no tax payable on selling your home in Australia, unless it is a second home or investment property, or you purchased it before 1985 (in the case of investments).
Council rates are assessed on unimproved land value - which usually lags well behind actual land market value, and far below actual house & land value. Most people pay more for electricity than they do for council rates.
I live near several old-lady-millionaires who moved into coastal properties on retirement - husbands have passed away and they are still in the homes 30+ years later. But they have no intention of moving and cashing in, and despite presumably modest incomes, have no problems paying the rates, which add up to about $40-50 per week. I also suspect their children aren't keen on them selling up.
Yes, no tax for the primary residence, somehow I forgot that.
But as far as council rates forcing people out, it does do that in some areas, especially when land value goes from something like 100,000 to over 1,500,000 in 30 years.
Sunshine Coast resident here, Demographia's most unaffordable in 2009. The Buderim market was insane during that time. Sold out in 2008 and sat it out until last year.
