Don’t most European cities have pretty strict building height restrictions? Of course that’s not as bad as banning multi family housing complexes completely but it does seem like basically the same core issue

Most American and European cities are significantly less dense than their Asian counterparts. There's a long way to go before they reach any natural limits.

The answer is to update codes to require new buildings have sprinkler systems, and not to put extremely flammable cladding on the side of a damned building. We absolutely need to be able to build more medium density housing more easily.

If housing values become stagnant or gradually falling, fewer people will use it as a store of value.

Edit: or even if there is a prospect of this being the case.

Jurisdictions in China have started taxing investment properties on a sliding scale that ramps up a lot the more properties you own.

They have also put heavy restrictions on bank lending.

Basically they are desperately trying to slow/reverse responsibly an out of control housing bubble.

That said they have unique cultural and geographical issues in terms of the sheer scale of their urbanisation

Assuming we went this route, housing prices would obviously fall in spectacular fashion. What do you suggest is done with the houses already rented out, does the government buy them from the owners? If so is it at a fair market pre-announcement rate or at a rate that causes losses to the owners, if for a loss what happens to the economy when those losses hit? What happens to the banks that own those mortgages? In addition why would you not now have massive amounts of empty housing as banks refuse to lend to unqualified buyers?

In addition, how do you account for the massive drop in new development that occurs as much fewer new houses are built as the housing prices are being deflated due to investment being banned? What about apartment buildings?

All genuine questions I would be interested in hearing a solution too?

If there is a cartel it is the government.

Pretty much every landlord (also developers) is out there to stab the other landlords in the back if they have the option, which they don't have. The price increase is purely driven by the availability of people who are willing to pay for the price increase and the landlords are not allowed to solve the problem.

I've heard this a lot, but is it true? I know some flats are empty because they're between tenants or being renovated, but how many are actually empty for years at a time? The idea that not earning any rental now (and paying tax on the place) in the hope that you'll bump up prices years down the line seems risky to me.

Only about 1% of the flats in Berlin are empty. Rents have tripled in recent years.