People promoting real estate as an investment usually do so by showing graphs depicting the more or less continuous rise in median prices and rents over a 20 year period. These figures ignore inflation completely, and show that prices rise in dollar terms, without admitting that for quite long periods real estate moves backwards when compared to inflation and other costs.

The other factors these figures ignore are:

Leasing incentives. A certain rental yield of rent/cost of property means very little if the tenant has accepted an inflated rental price in return for some special incentive. If free advertising, furniture, a discount on rent in another building, free parking or a year of free rent have been provided, then the rent figure recorded in the real estate figures will be too high. Investors who purchase buildings on the basis of such data, provided by real estate agents and developers, will find such high rents are unattainable, and will join the ranks of the many landlords out there who are custodians over empty buildings.

Failure to allow for capital improvements. Forty years ago there was no underground power, connected deep sewerage, high tech phone and data infrastructure, air conditioners, swimming pools and various other improvements. The $50,000 spent upgrading a property won't show up on the median price data, just the increase in the price.

Purchase incentives. Rent guarantees (mentioned elsewhere in this FAQ as a scam in many ways), interest free periods, free furniture and fittings, taxes paid and special rates for agent's commissions. The purchaser may pay a higher price if such incentives are offered.

More freebies. Free computers, free cars, free legal advice, furniture, free phones, stamp duty paid.

Other rebates. When car dealers notice sales are slipping they offer $2,000 cash back offers, the same thing happens in real estate. If the place was sold for $500,000 but $50,000 was rebated under the guise of some special scheme, the real price was $450,000, but not according to the price surveys.