The amount of property that investors can inspect or buy in Melbourne has diminished according to Jeff Grochowski, the principle of Accrue Real Estate. Auction clearance rates are high as buyers seek to lock in negative gearing investments. With Shorten's Labor party threatening to prohibit investment buyers, who seek to use negative gearing, from buying existing homes, there is a mini rush to snap up the best property. That increase in demand has also created uncertainty in the property market. Buyers are rushing to secure an existing residential property before Labor can change the rules. With the election due in July, people are on the hunt for homes to buy before the cut off date. According to Mr Grochowski, "If Labor wanted to reduce residential property prices then they have failed. The asking prices of existing homes in prime locations in the greater Melbourne area have increased since Labor's policy was floated." "There is a correlation between the amount of money that the Australian government misses out on with negative gearing tax concessions and the much higher amount of money that property creation and high volume sales of existing houses generates for governments. Older houses are selling well and stamp duty revenues are strong. Similarly, local government taxes and fees, state government stamp duty and federal taxes like GST, have never been higher" Mr Grochowski said. If Labor intends to generate more tax by removing concessions on existing property there will be consequences. Tax revenue will decrease when fewer homes are sold should Labor win. It did not work for Paul Keating in the 1980's and there is every reason to suggest that this time around, Labor will once again stuff up the property market. Labor under Keating hurt property owners, property buyers, builders, banks and support professionals like solicitors and designers who kept the property market humming along. When the consequences of the removal of negative gearing on homes kicked in, the market collapsed. Just as importantly, property industry businesses and workers suffered greatly as values decreased, work stopped and rental costs soared. Another consequence of the proposed Labor Party negative gearing changes, is that rental prices will increase as people who own houses will need a higher income to support mortgage finance commitments or annual returns on their investment. That will force lower income earners and many self funded retirees, who live in rental accommodation, to move to outer areas of all capital cities in Australia. Rents, according to real estate sources, will increase by between 2.5 and 3.00%. The property market is watching the election campaign closely and preparing for potentially unpleasant consequences that may flow from Shorten's property market experiment.Further reading: https://en.wikipedia.org/wiki/Negative_gearing

The economic and social effects of negative gearing in Australia are a matter of ongoing debate. Those in favour of negative gearing argue:

• Negatively-geared investors support the private residential tenancy market, assisting those who cannot afford to buy, and reducing demand on government public housing.
• Investor demand for property supports the building industry, creating employment.
• Tax benefits encourage individuals to invest and save, especially to help them become self-sufficient in retirement.
• Startup losses are accepted as deductions for business and should also be accepted for investors since investors will be taxed on the result.
• Interest expenses deductible by the investor are income for the lender so there is no loss of tax revenue.
• Negatively-geared properties are running at an actual loss to the investor. Even though the loss may be used to reduce tax, the investor is still in a net worse position compared to not owning the property. The investor is expecting to make a profit either when the net rental income grows over time and exceeds the interest cost, and/or on the capital gain when the property is sold. After sale, the treatment of the capital gain income is favoured by the tax system since the only half of the capital gain is assessed as taxable income if the investment is held for at least 12 months (before 2000–2001, only the real value of the capital gain was taxed, which had a similar effect). From that perspective, distortions are generated by the 50% discount on capital gains income for income tax purposes, not negative gearing.

Opponents of negative gearing argue:

• It encourages over investment in residential property, an essentially "unproductive" asset, which is an economic distortion.
• Investors inflate the residential property market, making it less affordable for first home buyers or other owner-occupiers.
• In 2007, nine out of ten negatively geared properties in Australia were existing dwellings so the creation of rental supply comes almost entirely at the expense of displacing potential owner-occupiers. Thus, if negative gearing is to exist, it should be applied only to newly constructed properties.
• It encourages speculators into the property market, such as in the Australian property bubble that began in the mid-1990s, partly the result of increased availability of credit that occurred following the entry of non-bank lenders into the Australian mortgage market.
• Tax deductions and overall benefits accrue to those who already have high incomes, which will make the rich investors even richer and the poorer population even poorer, possibly creating and prolonging a social divide between socio-economic classes.
• Tax deductions reduce government revenue by a significant amount each year so non-investors subsidising investors and so the government is less able to provide other programs.
• A negatively-geared property never generates net income so losses should not be deductible. Deductibility of business losses when there is a reasonable expectation of gaining income is a well-accepted principle, but the argument against negative gearing is that it will never generate income. Opponents of full deductibility would presumably allow at least losses to be capitalised into the investor's cost base.