If I work and sacrifice harder than usual throughout my life in order to build up what I hope is an enduring legacy for my family, paying tax on all that productive output, why must the legacy also be eroded away by tax? Wouldn't I contribute less to the economy of what it takes to earn that legacy if I knew it too would just be taken away in the end, as a sort of final gesture of contempt on top of having 40% of my working life's time and energy already 'harvested' in tax of one form or another. Yes, property values are far too high, and yes what is proposed is probably more economically efficient, in a sociopathic sort of way, and yes, to an extent things like rates and maintenance/depreciation costs also work in the same direction of eroding capital, but on a human emotional level level doesn't this policy mess with something pretty fundamental about the reason we work so hard all our lives and have much of an economy at all? After a lifetime running the taxation gauntlet, what we want is a finish line after which what a person has worked and sacrificed to build is finally safe from the demands of others. Why would we embrace the prospect of watching the product of all this work evaporate away to suit the agendas of other people, as soon as we are no longer harnessed to the treadmill ourselves? Why would society not continue to see as reasonable and desirable, a sense that something of tangible and permanent value is achievable as a reward for that life of hard work? a sense of fair play where there is a time limit on the demands it places on it's productive individuals? If property values and housing accessibility are the primary drivers of this policy, why not institute a near 100% capital gains tax on the unimproved land component of property value (with adjustment for general inflation and the current population in the country who arguably compete for the same land). That would allow a legacy to remain and be passed on, not penalise the economic activity surrounding home improvement and maintenance, yet eliminate the incentive to land bank, or hold property in anticipation of passive gains generated by the home improvement and economic activity of neighbours
So as I read it the basic question you are asking is:
Are you attacking the drive of people to leave stuff for their kids?
Possibly given that this loophole has been here so long now we have people investing inordinate amounts to accumulate the unearned gains from merely holding a particular asset type - housing. With that incentive removed those folk will need to put their money to work elsehwere. Investing in businesses that grow and employ and make profits and pay higher wages would be a fine thing don’t you think?
This tax will make houses more affordable you your kids won't need the inheritance to get ahead.