Geoff White, President of The Real Estate Institute of Victoria, has announced that Labor's proposed changes to negative gearing are short-sighted and would make renting more expensive.
White said that, as fewer investment properties became available, rents would rise, leading to a shortage of affordable rental properties.
The government would be forced to step in to provide government subsidised housing, he said.
White said that Melbourne, which has experienced strong population growth in recent years, would be hit particularly hard.
"With more than 100,000 new residents moving to the state in the past 12 months - and interstate migration at its highest in 40 years - ongoing, high level of available housing is essential to meet this demand," said White.
A small percentage change in Victoria's half a million rental properties would impact the lives of tens of thousands of Victorians, he said.
"Already, we are seeing a relatively low vacancy rate of around 2% in some areas of Melbourne, particularly areas further from the CBD, where families are looking for a rental property they can afford.
"If investors withdrew from the established home market in this vital property belt, it would cause a significant shortage in rental supply and impact heavily on the government," said White.
"More importantly," said White, warning of the potentially dire consequences for renters, "it will 'hit' those who most need help in the housing market."
Published in The Real Estate Conversation; Thursday 18th February 2016