Seems like an argument for internal visas like China's household registration system to prevent excessive migration to the cities.
The countryside is mostly emptying out so no need to prevent people moving or buying there.
However we live in a world where that isn't the case so a nation deciding to restrict immigration or economic activity by foreigners for the benefit of the domestic population is an acceptable position to take -- provided it actually have that desired outcome.
Liberalizing zoning and taxing land would do more to improve housing affordability.
With the big difference being the Chinese citizen being denied Beijing hukou is still a Chinese citizen. Madrid should properly first concern itself with Spaniards' wellbeing. (This isn't an argument for or against this policy. Just clarifying why restricting non-EU home purchases is different from hukou.)