The negative gearing debate has reared its head again, with Prime Minister Anthony Albanese failing to explicitly rule out changes as an election policy.

The threat of changes to negative gearing always hangs over rental property owners—the very same owners that governments rely on to supply the rental market.

Many investors fear that one day those changes could become reality.

I often wonder why various political parties continue to make property investing more difficult.

Investors provide an important service that governments cannot.

In Western Australia, they supply around 85 per cent of our private rental stock.

Without them, where would the rental market be?

That’s a rhetorical question.

We have clearly seen in recent years what happens when investors leave the market.

Close to 20,000 rental properties were removed from the rental market following the COVID rental moratoriums, and we’re still dealing with the effects.

Rents have risen to record highs, while vacancy rates have fallen to record lows.

This has been challenging for most renters, but even more so for the most vulnerable members of our community, with many becoming homeless.

Investors aren’t just sensitive to legislative change.

Even the threat of change can be enough to encourage them to sell.

Those properties may not be purchased by other investors.

In many cases, they are bought by owner-occupiers, which is exactly what we've seen occur.

While many people like to invest in bricks and mortar, it’s important to remember that capital is mobile.

Investors can—and will—take their money elsewhere if property investment becomes less attractive.

Some argue that if investors sold their properties there would simply be more homes available for buyers and prices would fall.

However, that view overlooks several important factors.

Firstly, those homes would not all come onto the market at once, so there would not be a sudden surge in supply.

Secondly, buyer demand is currently strong enough to absorb additional listings.

Prices may moderate, but a dramatic fall is unlikely.

We certainly didn’t see one when many rental properties were sold following the COVID moratoriums.

It’s also important to remember that not everyone can buy a home, and not everyone wants to.

For example, a teacher working in a regional town may not want to purchase a property they may need to sell again in only a few years.

For many people, renting simply makes more financial sense.

Others choose to rent where they want to live while purchasing an investment property elsewhere—a strategy commonly known as rentvesting.

Until governments can provide a genuine alternative to private investment, they need to ensure the legislative environment encourages and supports investors.

Article credit: Joe White, REIWA President.