Here is an analysis examining the relationship between house prices and productivity. The author claims that banks prioritised lending money for housing (it was much more profitable and less risky) than lending to business. This availability of money has contributed to increased housing prices and less business investment, development and ultimately reduced productivity. He claims that a correction to this imbalance won’t cause the sky to fall in despite the moaning of the self-interested like Brendon.

Yes, I know it’s an ABC article, and for some of you your eye balls will catch on fire if you read it, or your fingers fall off, but for those interested it is here:

https://www.abc.net.au/news/2026-07-14/will-property-tax-changes-save-australia-productivity-crisis/106910926

In the 1980s the Hawke government went after negative gearing for housing in much the same way as the present government is doing.

As some predicted then (as now) investors left the housing market, thus reducing the stock of rental properties. As a result, with more people chasing few rental properties, rents rose and became less affordable. The policy was introduced in July 1985. It was reversed in September 1987. It took a mere two years to find out that the policy was detrimental to renters.

History repeats.....