In an article I read today it has shown that the housing market for investors has stalled.

The interesting part of this is that the stall has been put down to an increase in cash rates for investors, in favour of home occupiers.

So, if an increase in cash rates has scared investors off and, considering ALL of this increase is a tax deduction through negative gearing, it kind of puts a hole in the theory suggested by many including the likes of Mr Eastlake that NG is hurting the housing market, doesn't it!

Just because the whole of the increased cost is tax deductible doesn't mean its cost-free to the investor. Depending on their marginal tax rate they'll bear somewhere between 50% and 80% of the increase AFTER tax.

That will have some affect on decision-making, particularly in regard to already marginal investments.

Negative-gearing investors are in it for the capital gain. Why else invest in something you know from the outset is going to be a cash-flow negative? So the recent consensus that the great upward price spiral is about over will have a much greater affect on investor decisions as well as the likelihood that interest rates will rise again.

If there are windfall profits to be made from rental properties why do the large institutional investors avoid the sector like the plague? The very few who have had some exposure inherited from the distant past have sold.

Maybe realistic risk and performance analysis (any risk analysis!) have been telling them something for thirty, forty years and more.

Government keeps revisiting the milch cow and dabbling as populist politicians do, which doesn't make it any better.

The rental property sector is high risk and highly unstable. It wouldn't take much to see most of those aspirational and woefully ignorant mums and dads 'investors' who compromise their own lifestyle and security (probably divorcing under the financial strain as well) to flee from the sector and never return.

Are the feds readying themselves for a crash? Can't see federal government getting ready to invest in and manage welfare housing. Canberra is still running mass immigration, with plenty of future welfare recipients in the pipeline.

OTB, rental property is usually only high risk if you chase the likes of unusual booms, such as mining towns for example.
When I invest I have certain criteria I follow and the number one for me is job opportunities in the area I am investing in. My investments are usually positively geared after a few years and if I do invest in high risk areas, I always do what I call a pick and flick where I take a profit as soon as its available.