With a federal election looming, Australians are increasingly unsure about whether to use negative gearing as a PAYE taxation reduction strategy.

The Labor Party is going to a federal election with a policy that will alter the negative gearing rules to exclude existing residential property from eligible investment categories.

The effect of that is to drive property investors to new stock in the form of new houses, new units or new apartments. Owners of existing houses can expect reduced demand for their properties as an entire class of buyers will be eliminated from the buyer pool by Bill Shorten's new proposal. The changes will not affect property investors who are not seeking to make a loss on holding property to take advantage of laws that allow them to offset losses against other forms of income such as PAYE income, property or share investment income or interest earned in cash investments. Cashed up buyers without finance will continue to buy existing housing stock.

The coalition is adamant that Labor's policy is going to drive down residential house prices due to a shift in the balance of supply and demand, as demand will fall. How that will affect tenants is yet to be seen as a combination of very low interest rates, very high prices and high demand, has never occurred in our nation's history. It is likely however, that rental income for property owners will be strong as the population will be increased due sustained immigration into capital cities.

Immigration is being used by the Australian government to drive demand to create jobs in the property industry and that will not be changing anytime soon. Australia is not a global leader in manufacturing in any field and the lack of diversity in the nation's wealth creation, is driving the economy to service industries such as travel. Property is being used as a driver of the economy to keep new people housed and many existing residents engaged in tax paying property related work: from Bunnings to bricklaying and from to finance providers to property brokers.

Some property marketing industry spokespeople suggest that investors should continue to get into negative gearing for houses, units and apartments, as neither major party has indicated that any new laws will be retrospective.

Jeff Grochowski of Accrue Real Estate said today, "Negative gearing is vital to Australia's economy. Tradies and suppliers rely on a healthy housing industry to survive and negative gearing is the driver of most apartment and single home construction across the nation"

Anyone looking to source property for negative gearing, should not grab any unit for sale without caring for the fundamentals. The aim for negative property investment is to make capital gains while making income losses from returns on the property, while it is held long term for capital growth. Therefore, it is a wise idea to get expert advice. Unlisted investment property offers the best chance at being able to buy from the pick of the property pool. The best streets attract higher gains historically than streets that are not in demand. Similarly, some suburbs will make more money for property owners than others. While location is important, other factors such as style, design inclusions, quantity of properties in a development, proximity to transport, access to school and ease of shopping, will always be prime drives of property value.

The best real estate agents and buyer's agents always have access to the best stock as they are the one's that are used by the best developers.

With Australia's population continuing to grow, there will always be demand for housing. So, whether or not residential housing continues to be in the buying mix, there will be negative gearing into the future, regardless of which party wins government.