I suspect the underlying problem here is that Australia has a housing undersupply (for a number of complex reasons) and has had for a long time, and pretty much the only way to remedy that is to continue to attract investment into the sector. Hence negative gearing. Landlords are not the only people who benefit from this type of arrangement - local councils are doing very nicely thankyou out of the housing prices in their area, allowing them to provide more amenities. I have no doubt that negative gearing helps fund a higher standard of housing stock in regional areas where the rent returns by themselves are not an incentive to invest. There is plenty of urban "back-filling" going on here in Adelaide, much of which would not occur without the investment incentives. I think the real problem in Australia is that our main urban areas are coastal, which puts constraints on how many people can live close to the main economic hubs (eg CBD). THAT is what pushes up the housing prices. There are other benefits to negative gearing too - it makes it easier to be a mobile/agile worker. Again, this has benefits in rural areas. If a skilled worker is able to rent out their home for a couple years without it being a financial loss situation, specifically to go an fill a skills gap in a regional area, then that's a win for everyone.