OK, so I found out my boss's boss recently sold a home in a prestigious suburb of Melbourne for about a $7 million profit over a 5 year period. He will pay zero capital gain tax on that profit. Adding income tax back in, you'd have to make approximately $3 million before tax per year to make the same amount of money during that period. That is equivalent to ridiculous amount of hard labour (like 100 hours a day), frugal living and ozbargaining for people like myself. And what did he do to earn that? Well, simply by living in pure luxury and being very close to the city and public transport, nice parks (maintained by all tax payers) and good schools.
My question is, how do you work hard and indeed ozbargain hard when this is the sad reality? What's the point? You'd never catch up. And this is not a one off "lotto" situation. You can apply this to all home owners within 25km of all major cities in all developed countries.
An increase in property sale values is only relevant if you actually sell the property.
And if you do sell you, in all likelihood, will be buying back into the same market (which has also increased in value).
Meanwhile, you can take comfort that OP's boss paid council rates based on the assessed value of their property, which is probably higher than a lot of their neighbouring properties.