This is an ideological issue:  1) Allow the free market to continue to decide, disregard protectionist approaches, disregard mechanisms to temper speculative behaviour, treat housing as any other commodity. Neo-Liberal/Conservative Approach: Solution -> Offer more supply 
2) Use policy mechanisms to reduce foreign investment, reduce speculative investment, treat housing as unique good for locals living and working here.  Social Democratic Approach: Solution -> Temper speculative demand