...and, investment in new rental housing will not happen until rents rise enough to mitigate capital gain reduction (loss?) from selling into a thinner market, i.e., when income return far outstrips that on other, non-quarantined, asset classes.

An investor paradigm shift will not reverse quickly, so I believe rent increases will overshoot before any correction.

P, & LF,

I already gave you the answer in the previous post, but given your complete lack of economic understanding I will go through it step by step. Note that the time period between banning NG in houses and the backflip was less than 2 years, a relatively short time.

1. NG is banned for housing. - This causes the return on investments in housing to drop, and the price of houses to drop. (over a year or so)
2. People avoid investing in housing for rental / capital gain purposes, and those with heavy NG houses to sell. (over a period of time ie a few years)
3. People avoid building houses as their value/investment is now less.
4. The stock of houses available for rent decreases, and the competition for rentals pushes the prices up.

However, the rate that rentals will increase will depend on the price elasticity of the market which by definition is the ability of renters to find alternatives.

Where the rental vacancies are high (ie 4%), a drop of 0.5% availability of rentals will make little difference, however, where the vacancies are 1% a drop of 0.5% availability has a far greater effect.

Which is in short why in Sydney and Perth the prices jumped far more than elsewhere, and why Keating was forced into a humiliating backflip.

W.R.T. the US, there are laws to protect mortgage holders such that a default on a mortgage would not allow banks/ creditors to pursue the debtors other assets, and as a result negative gearing on properties was not considered appropriate, but notably, when NG was removed, rents rose significantly.

Calm down Shal!

Don't know why your hackles are up against me, I'm agreeing with you.

Was it my "taking on board..." that annoyed you? I acknowledged that there is an argument that the NG quarantine had no effect, not that I am convinced by the argument, as my subsequent comment explains.

PS. Malcolm will get you over the line. Tony was, would have been, a completely dud ride into an election. In fact, he wouldn't have had the political capital to go into DD. Just sayin'

Luciferase, "This makes the Eslake analysis a little spurious for mine"

He is just another with an apparent mission, spinning for others.

General comment
While the focus puts the cart before the horse - on raising new and larger tax revenues for a Labor Opposition that cannot explain how it will fund its promises - instead on what should be the first concern, the sustainability of rental accommodation, it is all spurious.

Just to repeat what should be obvious to all, rental housing is high risk with the likelihood of catastrophic events (eg, home used as even a minor drug factory* or outlet), time intensive and complicated to manage. Any returns are very poor indeed. Why should the investor be forced to sell the farm (ie the business) to have any hope of realising a gain? Even then the 'return' is due to inflation and taxed again.

*drug factory - increasingly common and will bankrupt the owner. Because the house will be tied up for months for evidence purposes and the costs of stripping soft materials, professional toxic chemical cleaning and refurbishing. Then the risk and insurance problems of an ex-drug lab, or place where (say) meth was consumed.

It is not unusual at all to find plastered over holes in ceilings and sometimes walls from where tenants have installed ventilation shafts. Not just for drug production, but for other unknown toxic dusts and vapours. I saw one recently where it was established that the tenant had been sanding lead paint for restorations and drafting it into the ceiling space, which was white with toxic dust. What to do with the property now?

Many property managers are young women with limited life experience. The Real Estate Agent's first priority for them (and No1 selection criterion) is to present well as a receptionist for sales. Professional tenants eat them for breakfast.

LF,

Sorry, the post was aimed principally at Poirot, and while agreeing with you, I unintentionally gave the impression I wasn't.

I find the ABC fact checkers a bit of a joke. In this instance referring to the opinion of a single economist, especially one that openly opposes NG is like Newspoll based on the opinion of one bloke in the street. Economists are well known for widely varying political agendas.

While there are always a multiple of factors at play, and that the period between banning NG and backflipping was so short, the rise in rentals in Sydney and Perth probably wasn't entirely due to NG.

Given that Keating was not known to be skittish, and had a plethora of financial advisors, I find the assertion that he took the humiliating step of removing legislation that he had just passed on whim.

Perth and Sydney were the canaries in the coal-mine, once vacancy rates fell elsewhere the quarantine would take its course.

I'm interested in how high rents would have to have risen before investors weighed back in. My guess is a lot more than they had already.