We don't need to guess at what happens when negative gearing
is restricted. We've seen it before.
When the Hawke government removed negative gearing between
1985 and 1987, rents in Sydney and Perth - the two cities with supply shortages
at the time - rose sharply. The policy was reversed within two years precisely
because the rental market tightened so badly.
Today, the supply problem isn't isolated to two cities -
it's national.
If the historical precedent points anywhere, it points
toward tighter rental markets across the board once investor activity in
established properties pulls back.
Treasury's figures project a rental increase of around $2
per week at the median.
I don’t believe that, because it assumes that investor
withdrawal from the established market is smoothly replaced by new supply. And
given the construction constraints I just described, that assumption is doing a
lot of heavy lifting.
I see rentals going up by more than 10% in established
locations.
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Jason Gwerder
Sunday, 14 June 2026
