I met someone once who purchased their place in Manhattan in November 2001. At the time it couldn't be lived in, but they had faith that the city and the affected area would recover, which it has and I think they would have done well. The thing with buying property anywhere is that it always seems like a bad deal, but that's because most people underestimate the propensity of governments to inflate currencies. It doesn't take many years of high inflation for 'real' things like property to quickly rise in value. And, purchasing at the top of bubbles notwithstanding, most of the time the land value underneath the property will stay pretty constant. The house itself must be seen as a depreciating asset, but the land underneath will increase in value as long as the location is both desirable and economically growing (even better if it is above trend of the economy).
The problem with long-term renting is that, while you can theoretically engineer a better return by allocating as much as the principal component of a mortgage payment to one or more investment classes - most people don't. The key benefits to owning a property are (IMO)
* inflation hedge
* forced savings (the principal component of your mortgage)
* security of tenure
* ability to modify the property as needs arise (like extending, remodelling, putting in network cables and server racks!)
* access to further credit for other investments after equity is accumulated
These things vary country by country but the list is pretty much constant. The most important thing is to not get carried away and only purchase what you can realistically afford, and to allocate as much money to paying down the mortgage in the first 5-10 years.
As for the yield equation - like value stocks, it's where the story is. Most places at some point or another in their economic cycle will end up where the yield is very attractive, and that's the time to buy. And, as a wise old italian investor who could buy and sell me many times over once told me (after I made my first mistake) : never sell your property. Ever. Buy right in the first place and keep forever. If you find yourself hearing everyone say that real estate is a bad investment and see that rents are approaching mortgage payments, then buy as much as you can as quickly as you can.
The last 50 years has been the story of real estate growing in value. This may or may not repeat over the next 50 years, because demographics, national politics and household formation have all changed in that time. But inflation has been with us since the first clever financier decided to use paper money, and will stay with us while that is still the case. If you purchase with your head and don't listen to anyone else, you'll do fine.
Finally - on the lowest economic growth - in Australia, in the USA - in a lot of places - the cheap credit of the '00s has led to an over-investment in residential property. This takes credit and investment away from other parts of the economy where it could be used productively. And it results in banks being dangerouslly over-exposed to residential property as an asset class. I think this needs to be addressed, and pro-ownership govt programs(see FHMC in USA, First Homeowners grants in Aus) need to be dumped, despite the short term pain this would cause. Because the economy isn't going to get going again until all the bad debts and bad investments are cleared up and swept away.