Because you'll never build enough. Global demand surpasses potential local supply by a huge margin. Prices won't even begin to drop.
But some might say this will drive property prices down? Mission accomplished!
Foreign money is a real problem, there is no way around it. If you want your city's housing market to be a wide open safe haven for everyone in the world to park their money in, you're going to push out the locals because these investors' demand for housing does not increase locals' incomes, it only increases housing prices.
In Canada this problem is especially bad because of immigration loopholes for the rich. For vast majority of Vancouver properties it actually costs less to buy permanent residency via Quebec's immigrant investor program (~$100K in interest payments, no other requirements) than to pay this stupid 15% tax. Just let that sink in for a minute.
I live in Geneva, Switzerland. We are welcoming rich immigrants.
For example, just one of the many problems – a foreigner buys residency ($100K paid to Quebec, not BC), buys a house here, then continues to run his business in China, while their family moves into the house full time. Then their family uses up social services like universal healthcare, public schools and universities, while collecting low-income tax rebates because the breadwinner is not a Canadian tax resident, and does not need to declare their global income.
That's not some thought exercise, it's a very common occurrence here. So the rest of Canadians end up paying taxes to finance all this, and get inflated housing costs as a bonus. I don't see how that's a good outcome.
I've no idea how things work in Switzerland, but they don't work in Canada with our current laws.
- That is not correct. Vancouver proper is hampered re: expansion because of mountains and sea. It has limited availability of lands for development. Only way it can meet demand for housing is via vertical (i.e. condos) vs. horizontal (i.e. houses) ecpansion. But there is substantial local resistance to highrises, especially outside the downtown/west end area.