Rental yields have been in long term decline. This is due to a combination of lower interest rates, higher capital growth rates, and in part negative gearing. An IP investor has three monetary benefits - rent, cap growth & tax benefits - the risks he takes are compensated by the sum total of these benefits. If any one is changed then the others must also change to compensate. If one is removed or reduced it will either cause investors to leave the market (or potential investors to refuse to enter), or the others must increase to make up the required return for risk taken. The ALP is proposing to grandfather existing NG arrangements, and in 2017 only allow it on new builds (or maybe those that increase supply?). Grandfathering will keep the 90% of voters (approx 1.6 million) who own 1 or 2 IPs happy, so there is likely to be little political fallout. Before the details were released, my initial though was YASP (Yet Another Stupid Policy). But for existing investors it may be a particularly beneficial. We get to keep our tax benefits on our well located property, while the supply of new well located rental property is being restricted. Natural attrition will reduce the supply of these well located rental properties, and potential investors are being discouraged from purchasing those properties - this can only lead to an increase in rents for the existing stock in the medium term. Investors will be encouraged to purchase in the outer ring where the new builds are, or in new high rise. Consequently, renters will be either forced to live there or pay dearly for a place in the restricted pool of well-located IPs. And if ALP reneges on the grandfathering & abolishes NG altogether, then those investors that do choose to hold until they achieve +ve c/f, will benefit similarly with higher rents due to restricted supply. The current generation of FHB may be able to purchase at a slightly better price today, but at the expense of future generations. The next generation of renters are likely to be paying higher rents. They will be the ones that will be complaining how much easier it was to save a deposit back in the 2016 & how lucky FHB were back then. This policy will have the desired effect of encouraging more housing supply, but the serendipitous side effect for existing investors will be an unbalanced rental supply. The bottom line is that any well-located IP is likely to experience relatively more growth and higher rents in the medium/long term because of these changes... so if you think it's likely to happen then make a move before 2017.