Now is as good a time as any to reform negative gearing, particularly if there are grandfathering arrangements for existing investors and negative gearing is restricted to newly constructed dwellings only.
Changes of this nature should prevent backlash from pre-existing investors, who get to keep their lurks, while at the same time removing speculative demand from the housing market which, as we all know, is running near record levels, according to recent ABS housing finance data.
Meanwhile, by redirecting negative gearing to newly constructed homes, the negative impact on construction from lower overall housing demand (and prices) would at least be muted; or perhaps construction might even boosted by the change, as the shift of first home buyers grants to new builds appears to have done.