Labor negative gearing policy could cause recession or depression

Mark Steinert, chief executive of Australia's largest residential property developer, Stockland, believes Labor's housing policy has "the potential to destabilise the entire economy" – to the extent of "risking a recession".

"At the end of the day, house prices are unlikely to adjust so much that it would really change that affordability equation anyway," Steinert told the Australian Financial Review.

"And if they do, believe me it won't be a recession. It will be a depression."

Steinert told columnist Jennifer Hewitt property is such a major force driving Australian growth and activity, that even a small change in the market and in sentiment flows through the entire economy. 

"Housing represents $6.5 trillion of the Australian people's wealth," he tells The Australian Financial Review. 

"It is so big and so many people are involved that even when that order of magnitude of change is obviously small compared to the stock market…its affects people.

"It becomes the new dinner party conversation.

"People feel poorer. 

"They buy less in the shops and people employ less and people are less willing to borrow money to start a business and suddenly that goes on.

"That is how markets work.

"The only way you deal with affordability in my view is first and foremost about supply…in a structural way.

"You cannot deal with affordability in a manageable way by de-stabilising the largest asset in the country."