And it doesn't involve changes to capital gains tax or negative gearing, which would be more effective but, strangely, the government won't touch.
It's a lever which the government has pulled before – and it worked.
The government could direct the Australian Prudential Regulation Authority (APRA) to force lenders to limit the number of loans they offer to investors.
In 2014, with investors flooding the property market and prices out of control, APRA introduced a 10% limit on the increase in the number of investment loans which banks could offer. Then, in 2017, it put a 30% limit on the number of interest-only loans which could be offered.
By limiting the number of investment loans, a natural consequence was that interest rates for investors went up. Interest rates for owner-occupiers stayed the same.
For the first time since investors sent property prices soaring in the early 2000s, the market was tipped in favour of owner-occupiers over investors.
While the limits were eventually removed and prices started climbing again, the policy of limiting investment loans actually worked – and it would work now.
"Now that the RBA has cut interest rates again and with more cuts expected, history will repeat itself and investors will likely flood the market and potentially send property prices through the roof," said Matt Grudnoff, Senior Economist at The Australia Institute.
"If that happens, whatever buyers might save with a lower interest rate will be wiped out by price increases.
"If the government acted to limit the number of investors crowding out owner-occupiers, young couples and families would have a fighting chance.
"This would be a big step towards levelling the playing field for those seeking to put a roof over their heads.
"For too long, investors have had a huge advantage, with huge tax breaks for property speculators.
"It would be more effective to cut the capital gains tax discount and scrap negative gearing, but the government – even with a huge new majority – isn't brave enough to do that. This could be the next best thing.
"While the government is doing its best to increase supply, that will take time. Probably years. It could introduce this change immediately."
