Negative gearing sucks... It always has.. The problem is that Australias housing market has been built up around the negative gearing model. It encouraged the building of homes to be sold as investments and encouraged employment. Thats the "Boom" side of the problem. The US had a similar real estate boom, but in their case funded by easily obtained finance in the imfamous "Ninja" loans. The lack of regulation in those loans led to people investing with no equity and the prospect that the capital gain as the value of the house rose outpasing the repayments..
The Australian issue is a little different as the low interest finance was provided by the extra low interest rates put in place to stave off recession, and then later to keep activity moving through Covid.. But it was never as easy to get a loan as it had been in the US, Nor was the housing supply as plentiful as Australian development is centred around a few large coastal cities.. I understand this doesnt help people find a home they can afford, or indeed find a reasonable rental property to rent.. But the negative gearing aspect was used as an incentive to get people to invest and create that rental supply...Unless the goverment is going to get back into the business of building public housing in large quantities this problem is going to be with us a long time..
At this point its fair that I declare that my son and his wife have several POSITIVELY geared investment properties of their own. Meaning that each one returns more than it costs to service the loan, which is the smart way to do it...😷
