Here's proof negative gearing will be one of the hottest topics in this election campaign

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If there was any doubt that the use of negative gearing in Australia’s residential property market is going to be one of the most hotly debated subjects in the current election campaign, that’s quashed by the chart below.

As part of its weekly consumer confidence survey, ANZ measures the number of monthly Google searches for “negative gearing” going back to 2008.

There’s an amazing spike, particularly given May is only 10 days old! But it’s clear that as the political debate between over the subject ramps up, public interest is now at its greatest level on record based on this metric.

Mounting concerns over housing affordability in Australia’s largest cities, along with a clear divergence in policy between the Coalition and Labor over the use of negative gearing for residential property has no doubt contributed to the surge.

In February ALP leader Bill Shorten unveiled plans to limit the negative gearing tax break to newly built housing and end it for existing homes, stating that he wanted to ensure a “level playing field for first home buyers competing with investors”.

“We will put the great Australian dream back within the reach of the working and middle-class Australians who have been priced out of the housing market for too long,” Shorten said.

“Mum and dad investors who have a house or apartment that is negatively geared right now will keep the deductibility, but after 1 July 2017, negative gearing can only be accessed for new houses.”

The tax break, which allows property owners to reduce their overall taxable income by deducting losses from the investment, has been criticised by some parties as giving investors an unfair advantage over first home buyers.

In response to Labor’s policy, Australian prime minister Malcolm Turnbull announced in April that the Coalition would make no changes to existing policy.

He criticised Labor’s policy, suggesting that it would lead to homes being devalued and less investment.

“Labor’s housing tax plan will deliver a reckless trifecta of lower home values, higher rents and less investment,” said Turnbull. “The key to improving housing affordability is more houses, more dwellings.”

“Labor is taking a sledgehammer to the ambitions of mums and dads who want to invest — whether it’s established houses and apartments, commercial property, shares in listed companies, or shares in their own business,” he said.

Documents released by the Reserve Bank of Australia earlier this month following a the Freedom of Information request, the bank stated that it was “only concerned with negative gearings interaction with capital gains tax”, suggesting that it “may encourage chasing of capital gains”.

It also acknowledged that “property is especially impacted as it can be purchased using higher leverage than shares, for example”.

According to the ABC, which requested the information, the document was produced sometime between March 2014 and April this year.

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