Housing distortion already exists: Shorten

Opposition Leader Bill Shorten has dismissed suggestions that Labor's plan to rein in negative gearing will distort the housing market, saying a distortion is already happening under the present taxation system.

Prime Minister Malcolm Turnbull slammed the opposition's plan to limit negative gearing to new properties, saying it is badly designed and could cause distortions in the housing market.

"Why is it that Mr Turnbull will fight so hard for a system where it's a battle, an expensive battle to get your first house, where Malcolm Turnbull will give you a tax deduction for your fourth house," Mr Shorten told reporters in Melbourne.