Housing demand would likely not be hurt in the short term even if negative gearing were scrapped, according to a senior National Australia Bank executive.
Labor has promised to wind back negative gearing along with capital gains tax concessions if it wins the July 2 federal election, prompting the government to warn of a slump in house prices and a drop in the availability of rental properties.
But asked on Tuesday whether the housing market could sustain the loss of negative gearing against a backdrop of low interest rates and a shortage of supply, NAB group executive of personal banking Gavin Slater said his bank was not predicting any short-term ructions.
"I don't want to get into the policy debate," Mr Slater said.
"But in the short term, any material impact on the housing market - we're not predicting that."
Mr Slater stressed he did not know how the housing market would react to the absence of negative gearing in the longer term.
Mr Slater said that current low interest rates and supply issues meant investment properties were still affordable.
"So, there's still reasonable yields being generated from the rental market to cover the obligation," Mr Slater said.
Mr Slater said there was still high demand for investment properties even after the Australian Prudential Regulation Authority's introduction of a 10 per cent so-called "speed limit" for investor property loan growth.
"Demand for investment properties is still very strong both across apartments and residential lending: that has stayed pretty constant," he said.
Mr Slater also said the mortgage market at the moment was the most competitive it had been for quite some time, with customers more prepared to shop around for the best deal.
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