[myrmidon]

I'm from a region negatively affected by this.

Foreign capital is undesirable in the housing market because:

1) It raises demand (when buying a home as a local, you now also have to compete with foreigners "investing", and this raises prices).

2) It often develops housing in a very unhealthy direction: Airbnbs and vacation apartments are toxic for local society and must be kept in check, otherwise you end up with half the houses just being shuttered for the whole off-season, and towns becoming empty husks.

3) Rent is a lot of money, and its obviously beneficial if it stays in the local economy instead of flowing abroad.

[nradov]

Why is there insufficient new housing development in your region?

[braiamp]

Because that implies more supply and landlords are happy with the supply being restricted. The people that has the money to build won't, the government will follow the money, so the state doesn't help. That kind of question reeks to "why are you poor?", well, because I have no money!

[myrmidon]

I don't think there is, really, but plenty of potential housing (and also the cost of construction) is pressured by "pseudo-housing" (Airbnb, vacation apartments, boutique hotels), often fueled by foreign capital.