One of the enduring myths about Australia is the role of property as the only pathway to wealth creation. Like much of the Western world, property ownership is ingrained in Australia’s psyche as the best way to secure our financial future.

Over the past 10 years, the median house price has increased by 80 per cent nationally, and by 100 per cent in Sydney. However, like many myths, reality is not always as it seems.

The price appreciation of a broad global equity index over the past 10 years is 170 per cent,

When compared with other asset classes, the performance of residential property looks quite pedestrian. In comparison, the price appreciation of a broad global equity index over the same period is 170 per cent, and that is before considering dividends. So where is all this property wealth coming from?

It’s not so much price appreciation itself that has created so many property millionaires, but rather something called “leverage” or “gearing”.

For Australians who own property, the leverage provided by their mortgage has allowed their equity in a house to increase at a rate much faster than the value of the property itself. This outcome, in combination with other tax and........

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