[llimos]

If cities are deciding on these taxes themselves, not central government, they can adjust it dynamically until the need for rentals and the need for affordable homes balance out. They could even do it per neighbourhood.

If it never balances out - that is a sign that there are simply not enough houses, and they need to start building.

[crazygringo]

How do you define "balancing out"? There's no such thing.

As long as taxes are the same between the two, the market will balance them.

Building is a separate issue.

[llimos]

It's not so complicated to judge whether rents are too high or house prices are too high or both. It might be somewhat subjective, but that's government's job - to make those calls.

[crazygringo]

But the market adjusts automatically so why do you even need a government to make a call?

That's like saying the government should be involved in making a call as to whether apples and oranges are too expensive relative to each other in the supermarket.

[llimos]

Because housing isn't a free market. There's a finite supply of land, and what you can do with it is even more tightly controlled.