RESIDENTIAL property has long been considered the most secure extended-term investment in Australia, and represents the country's largest store of personal wealth. Reserve Bank calculations in 1990 showed that per capita private wealth was around A$74,000 (about HK$407,000), with 65 per cent, or A$48,300, of that amount derived from domestic property. Over a 20-year-term, median house prices in Sydney have climbed by an annual average rate of 11.3 per cent, according to the latest Housing Activity Report from Hooker Research. But this rate of return is substantially boosted with the financial leverageof a mortgage. Home owners with a 75 per cent mortgage would have seen their equity rise at an annual average rate of 19.3 per cent. Yet even this is unrealistically low, suggests the Hooker report, since it is based on a misplaced ''buy-and-hold'' assumption. Few home buyers remain in the same property for two decades. More commonly, they move or ''upgrade'' about every five years. Assuming just one upgrade five years after taking out the original mortgage, then re-investing in a larger house, also with a 75 per cent mortgage, the return over 20 years would have climbed to an annual average of 23.9 per cent. This would mean an investment of A$5,150 in 1972 would be worth A$372,000 in 1992. Hooker calculated the capital growth for a succession of four, five-yearly upgrades, maintaining the 75 per cent mortgage in each case, with the initial investment of A$5,150 would have grown to A$1.1 million. That is a annual average rate of return of 34.4 per cent over that period. The research project acknowledges that such spectacular capital growth is hypothetical, since the monthly mortgage payments required in later years would probably have exceeded the owner's ability to pay. ''These figures may help to explain why most investors in housing feel, quite correctly, that they have enjoyed much better investment returns than the bald figures on median house price trends would suggest,'' said Hooker managing director, Dr David Rees. In keeping with its long-term perspective, the report also notes how the pattern of Australian property investment has changed. In the 1970s, for every dollar spent on commercial and industrial construction, A$2.50 was spent on residential building. Though traditionally perceived as the most stable sector of the market, residential housing as an investment was challenged during the 1980s boom, with the commercial and industrial sectors attracting an equal share of investment. Hooker's research predicts the 1990s will see a return to the supremacy of the residential sector, as Australia's recession, the oversupply of office accommodation, and the relatively poor stock market performance, reinforces the solid track record of domestic housing investment.