I wasn't meaning to take a dig at anyone, but rather it strikes me that investors are optimistic on the returns that they'll get. (And there's academic research to back this up.)
We live in an era of relatively low growth, inflation and wage increases. For most Western countries if they're around the 3% to 4% mark then all is well. As such, I'd expect asset classes in general to move at that sort of rate, and I get suspicious if things show faster growth rates, particularly if the associated income hasn't changed.
Now someone who's buying a poorly yielding (negatively geared) property is taking a bet that the capital gains will more than make up for any shortfall. If you've bought a place yielding 3% or 4% against 6% or 7% interest rates plus a couple of percent in other costs, you're taking a bet that over the medium term the property's price is going to rise in excess of inflation or wages.
Given that long term studies of the housing market have shown that historically prices move in line with wages, I'm not convinced that's a good bet to take, particularly when Australia is expensive in international comparisons.
The trouble is that a lot of people are looking at it from the point of view that house prices have doubled or trebled in the last decade, so the belief is that history will repeat itself, and they'll be rich. I think that this is a mistake based on a short rather than long term historical view, and that the assumptions guiding the investment decision are poor.
Losing money on a bad bet isn't clever, so like I said, they're suckers.
It's entirely possible that my assessment is wrong, and that the market will move against me. (It's got a habit of doing the whole irrational longer than you can stay solvent thing.)