[HappyTypist]

If you make residential investment more expensive (through taxes), you will have less interested investors. This reduces the number of interested parties for home ownership, which means that the remaining parties (i.e. owner occupiers) pay cheaper prices.

Taxes are often used to discourage behaviour society believes to have negative externalities. For example: tobacco excise taxes; and also in the other direction (e.g. concessions for long term capital gains; which is supposed to encourage 'investment').

[imtringued]

Yeah in this case investors are punished for investing into space inefficient single family homes. Multiple apartments on a plot reduce the tax burden of the land value tax. So big investors will primarily invest in multi family housing.

In general taxes are regressive and people want to avoid them. If you tax regressive behavior the most, people will stop doing it.