The biggest problem both cities have is that everyone seems to only want a detached house. Condos are cheap in Toronto and they pump them out constantly but everyone still wants a fully detached house.
So, it'd be like eminent domain, but you can keep living in the property (if you do live in the property) until you die. But, if you were to try to sell the land, you'd only be allowed to sell it to the government, at the market rate (as they would pay in under eminent domain); where the city would then tear down the detached home and (presumably) re-zone the land for highrises or mixed-use buildings.
Where did you get that it has some of the highest ppsf? A quick search shows just about every other major city I could check being higher.
Not for long. In Vancouver condos were pretty cheap, at least until the average detached house topped $1 million. That puts them out of reach of middle class families and then everyone is competing for those condos. 3 bedroom condos are approaching $1 million now.