Yeah nah. I don't really follow this. Unless you consider terrible traffic and less than idea air quality luxuries. Having said that, I did live in Adelaide for 13 years.
It's a fact, not a matter of opinion. People definitely do pay a premium for the luxury of living in LA/SF/NYC. Just look at the rents as you move further away from the center of the cities.
You and I may argue whether it's worth paying that premium, but that's a separate conversation. Location is the most important valuation metric in real estate. A one acre piece of land in rural America could be worth $5,000. An acre in Manhattan is worth $90M+.[1]
[1] http://cityroom.blogs.nytimes.com/2008/05/13/2100-a-square-f...