With Australian housing investors earning $51.2 billion in gross capital gains in 2015, it is easy to understand why property taxation has become an important battleground in the upcoming national election.

Labor leader Bill Shorten is planning to curb the benefits of negative gearing and concessional capital gains tax, while Prime Minister Malcolm Turnbull is arguing that such changes could hit house prices.

According to Tim Lawless, research director in Asia Pacific of CoreLogic, policy changes could have an effect on the real estate market.

“We are already in a marketplace showing signs of weakening. Our forecasts suggest a reduction in the rate of capital gain in 2016 and some falls in 2017,” Lawless said. “Any policy decisions need to be carefully thought out. A policy that involves an erosion of wealth could flow into reduced household consumption at a time when the economy is relying more on consumption to drive growth.”

But while Lawless does not recommend one policy over the other, Mark Steinert of the Property Council pointed out that the changes proposed by Labor could tip the economy into recession.

“At the end of the day, house prices are unlikely to adjust so much that it would really change the affordability equation, anyway,” Steinert said. “And if they do, believe me, it won’t be a recession. It will be a depression.”

On the other hand, the Grattan Institute said that this same move will reduce house price growth by two per cent.

“If you change the price of an asset by two per cent, the impact on the economy is pretty small,” said Grattan chief executive John Daly.