[snidane]

There is clearly problem with the immediate nature of such market, that is being forced to move out quickly out of a property if one undervalues it.

Then there is clearly the problem with current market set up, which basically allows people to trade with infinite length property rights, especially on land. This gives incentive to buy and never sell, because you know that new generations will have to live somewhere and you will be the one able to provide this service. Esentially leading back to pure feudalism.

A middle ground solution could be to make the land market with land tax not immediate, ie. sell whenever someone else outbids you, but as auction for the property every, let's say, 7 years.

This would give you enough time to consider investing into the property withou losing it right away due to trivial underpricing. It would also solve the optimal property allocation, just on longer term. Another advantage for agricultural land would be that a piece of land couldn't enter the market unless it underwent the seventh sabbatical year of resting, which you could actually enforce under this system.