The reason people should be worried about rent prices rising if negative gearing ends, is because of investors aiming to begin capitalizing on their property investments.

One perspective much of the media has is; lots of investors looking to buy = high demand for property = higher property prices. Removing negative gearing = lowering demand = lowering prices. But there are way more factors at play here.

A negative geared property has a lower rental return than mortgage repayment, meaning the property cost must be much higher than the properties rental worth, right? But, the value of the property is determined by the value of both land and building. People pay more to rent nice, comfortable buildings; crappy buildings = lower rents then nice buildings would demand on the same land. Land in Australian cities is really valuable. Love it or hate it this country has one of the highest standards of living in the world. We have tons of infrastructure, actual employment opportunities, lower crime then many other western nations, and a growing population. To top this off people from rural areas are expected to continue moving towards cities as our farmland becomes less labour intensive. This means our city land prices can be expected to go up in value.

Right now we have a lot of shitty houses within sight of some of the nicest cities in the world, sitting on top of land that is worth a mint. Up until now there has been no real motivation to capitalize on this because lower rents = a decent tax break. This allowed high income earners to gain real estate with cash that otherwise would have went to taxes. There has been no motivation to gentrify many of the cities inner-ish, but lower rent suburbs. For some reason much of the media, and a good portion of this sub, think that these investors will drop tonnes of property on the market all at once, dropping property prices exponentially, and taking massive losses. That wont happen.

You think people who invest in real estate to negative gear don't have accountants? That because they are wealthy they must be stupid? What makes more sense, sell now for a loss OR take out an equity loan and begin renovating to demand higher rents? Take one guess what the banks are going to recommend. And they wont have a need to drop the property on the market anyway because nobody is going to introduce an end to negative gearing without grandfathering the existing properties. So property sale prices wont have a need to drop, they are just unlikely to keep climbing without investment into new and improved buildings on the already valuable land. And this will see low income city suburbs gentrified, pricing the lower income earners out, and forcing them to move to the mass produced cheap houses on tiny plots that are far enough away from the city center that no tourist will ever have to see them.