As elections loom, it’s become almost routine for politicians to drum up support by taking aim at property investors, with calls to abolish negative gearing frequently resurfacing.

Although the next Federal election doesn’t have to be held until September 2025, the push to end negative gearing has already begun.

The reality, however, is that neither major party is likely to scrap negative gearing—and even if they did, it would do little to solve Australia’s housing crisis. In fact, removing it could potentially make the situation worse.

Many of the loudest critics have only a vague understanding of what negative gearing is, how it operates, or how ending it might supposedly fix the housing market. Those who do understand the system often warn that removing it could lead to far more harm than benefit.

In the 1980s, Australia briefly abolished negative gearing, only to reverse the decision within two years. Why? The policy change triggered a shortage of rental properties, sent rents soaring, and did nothing to make homes more affordable.

The same scenario is unfolding now in New Zealand, where negative gearing is being reinstated to address similar issues.

A recent Australian Financial Review survey of experts concluded that removing negative gearing could prompt investors to sell their properties, reducing rental supply just as vacancy rates hit record lows.

Any potential benefits, such as hypothetical price reductions, would likely be short-lived and outweighed by an intensified supply squeeze.

Their overwhelming message is: Be careful what you wish for!