Fear has never been a particularly productive emotion for investors - albeit it is arguably the hardest to ignore.

On the other hand a healthy appreciation for risk can be the best form of defence an investor can have in terms of building and maintaining wealth.

The fear factor is certainly alive and well for property investors reading the March 5 edition of The Economist magazine. The global wrap up of property and in particular its role in the asset price bubble that ultimately fuelled the global financial crisis is a well documented, if salutary, read.

But for Australian investors the description of property markets in the UK, Ireland, Middle East and the US and the inherent risks probably resonates in the same way a review of the property market on Mars would - i.e. we live in a different world.

The Economist' analysis is naturally colored by its European/US focus and the collapse in values and foreclosure rates that hit those residential markets.

So for Australian investors this could either be regarded as largely irrelevant or as a valuable free lesson where we can learn from the pain experienced in other markets having been largely insulated ourselves.

Residential property is the foundation of most people's personal wealth - our home is our largest asset typically well ahead of our superannuation balance. It is also the asset that most people regard as the "safest" or most secure.

What The Economist report does is challenge you to consider property investing from a different perspective. What is it about property that makes it potentially dangerous?

There are some elementary points that can be made here. Property investment is generally large in terms of an individual's overall portfolio. It is highly concentrated in one building/dwelling and then you typically add significant borrowings.

You can see how when looked at through the lens of rational, well-accepted investment practice property looks to have many high-risk characteristics.

We all have biases but in Australia our conditioning and experience around property is particularly strong and that is what makes The Economist report a challenging read.

Consider how your attitudes to investing vary between asset classes. If you compare two people who have $500,000 to invest and plan to borrow another $500,000 to get to a round $1million.

Investor A buys a rental property; Investor B uses the $1 million to buy one leading company's shares.

Around the dinner party table who is likely to be regarded as taking the most risk? Both clearly carry concentration risk in terms of one share/property.

Yet our share investor could sell parts of his/her holding if needed for income or to reduce debt quickly - as we saw in the global financial crisis liquidity has a real value in a crisis.

Then we need to consider the emotional and behavioral side of investing in property. When we buy a house it is part investment part consumer item. The Economist makes an interesting point around price setting. Let's face it unless you are Warren Buffett it is unlikely your share buying will move a company's price.

But when it comes to house prices one silly bid can certainly shift price points - or at least change vendor expectations. This point resonated on a personal level with a house sale in a Melbourne suburb recently. Agents were quoting a price range around $1.8 million but neighbours were tipping closer to $1.3 million - why? Because no house in that street/area without river frontage had sold for more than that amount.

Come auction day and the property sold for more than $2.3 million. The vendors and the agents weren't the only one's celebrating. The neighbours went home from the auction reflecting on the new high water mark for their neighbourhood.

That simply illustrates the "wealth effect" that property has. But what The Economist article is pointing to is the opposite effect - what if the property had sold for 25 percent or 50 percent less than the neighbours had expected? In an Australian context today that seems a ridiculous notion yet numerous developed markets around the globe have experienced just that.

This is not to say the Australian property market is about to collapse. Our high employment levels, tight land supply, strong banking system and steady population growth mitigate against that.

Rather it is about asking - as The Economist has done - the contrarian question. And perhaps taking off the consumer hat and looking at property through the unemotional eye of the investor.

More from IBT Real Estate:
Newsletter: To receive real estate update, sign up here