Capitalism as all about user pays and minimal Government interference in the economy (free market morality)
So, if a Government favours one type of investment that, IMO, is not capitalist; in fact it could be considered "socialist" IMO, (anti free market economics)
The Hawke/Keating Government took the first steps to privatise Social Housing as an internationally agreed package to float the AUD (before that the AUD was tied to the USD-something like the Chinese Yuan now)
This was based on US driven Neo-Liberalism which in theory says that Government should play a minimal role in the Free Market economy.
At that time , contrary to Free Market Neo-Liberalism, concessions on CGT & Negative Gearing was introduced as an incentive to private investors to take over Social Housing.
Ironically Government's tax interference in the Social Housing Market can be also considered Socialist in that this market segment is treated differently to other forms of private investment.
The ATO does not allow other non-profitable investments costs to be offset in PAYE tax concessions. So, in summary, negative gearing is in essence Socialist in that investment housing by individuals whose principal source of income is via PAYE tax employment status.
So, IMO, its difficult to argue free market capitalism while benefitting from the Welfare State
