BIS Shrapnel copped some heat this morning for apparently suggesting that changes to tax rules could impact rents.
It's that straightforward, investors pull out and rents go up, investors rush into the market and rents steady or fall.
All other arguments are usually a smokescreen for another agenda.
There exists a significant proportion of the market that is not in a position to buy, and increasingly many Australians rent by choice as the workforce becomes more flexible.
The first was from 1985 was monthly investor lending crashed by more than half from $210 million in May 1985 to $99 million by January 1986 due to changes in tax legislation, before stabilising somewhat (lending then jumped back to $240 million in July 1987 when negative gearing rules were reinstated).
The figures below show that investor lending all but halved for a second time from $10.1 billion in June 2007 to just $5.1 billion by January 2009, as investors were spooked by the onset of the global financial crisis and predictions of a crash by some market commentators.
As you can see in the chart below, investor lending rebounded strongly from the month of February 2009, the month within which Kevin Rudd announced his famous $42 billion stimulus package, at which point rental growth quickly cooled again.
The key point is that investors were not immediately replaced by homebuyers, and rents spiked more or less exactly as you should expect - fewer rental properties on the market resulted in higher rents.
The index may even turn negative in the near future, which is obviously great news for renters.
Prices to fall?