Liberal MP John Alexander has sounded the alarm on negative gearing reform, suggesting that the Reserve Bank's concerns about house price bubbles should be managed by placing a cap on the tax-deductibility of investment properties.

Following the fourth interest rate cut in 10 months last Tuesday to a record low 0.5 per cent and the first bounce in investor property lending in more than a year, Mr Alexander said now was the perfect time to think about introducing such a measure.