Yep...the rental property investor with negative gearing (with their losses being deducted from their other income) has been effectively subsidised. The government also pays accommodation supplements so that the tenant can afford the rent on investment properties! In addition the geared up property investor has been enjoying non-taxable capital appreciation. In the meantime the fixed interest investor is even taxed on the effect of inflation on their money! The Financial Service Council have interesting research - especially their Taxation and Savings Paper.
http://fsc.org.nz/
Some fixed interest investors cannot afford to buy housing so they are denied the opportunity to enjoy the "tax efficiency" of rental property investment.
In addition, owner occupiers are effectively subsidised by renters as rent has to be paid out of taxed income whereas the imputed rental benefit derived from owner occupation is not taxed. As more renters (compared with owner occupiers) tend to be younger and/or poorer, from both an income and wealth point of view, that is another inter-generational and regressive effect of the current tax system. It all adds to real estate being a preferred asset class in NZ.