Negative gearing is not a recent phenomenon – it has been
allowed under Australian tax laws since1936.
But it wasn’t until the 1980s that it became a focal point
of policy debates.
In 1985, the Hawke government briefly removed negative
gearing, hoping to curb property speculation and make homes more accessible.
However, this move backfired.
With fewer investors willing to take on the costs without
tax relief, the rental supply shrank, and rents skyrocketed, especially in
Sydney and Perth.
Recognising these impacts, the government reinstated
negative gearing in 1987.
This experiment showed that curbing negative gearing didn’t
increase housing affordability but rather strained the rental market, leaving
lower-income households particularly vulnerable.
This historical precedent demonstrates that removing
negative gearing could lead to similar challenges in today’s market,
potentially exacerbating the very problem it seeks to solve.
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Jason Gwerder
Friday, 31 January 2025