Simple Solution to House Price Inflation

All over the English speaking world house price inflation is out of control. New Zealand is no different. House prices are said to be "cooling" when the "only" increase 12% per annum! Investors in any other capital market should do so well!
House price inflation is rather more pernicious than other forms of inflation because it denies one generation the opportunity to save while the older generation pockets tidy capital gains. Of course the younger generation will eventually inherit the earth but if all they inherit is a bunch of credit card debts, they may not be too excited about it.
House price inflation is also a form of inter-class war. Because house price inflation is not included in the CPI as calculated by Statistics ( because it is partially made up by interest rates which in turn are based on CPI) the average worker's wages are not adjusted to take account of these price hikes. The result is the rich get relatively richer and the poor stay poor.
So what could we do about it? Some suggest a capital gains tax. To some extent IRD already has one on houses which are bought by landlords and run at a loss. There is some merit in using the tax system to encourage investment in businesses given banks are positively incentivised through their balance sheet requirements to invest in property (equities are only counted as half their value). However to my mind this will not b sufficient to prick the speculative bubble.
It seems to me the best course of action is to cut the source of capital off at the root. Most of the new capital in the New Zealand property market comes from the US. An investment property in NZ is a good deal. Relatively cheap and tax free. So why not simply require land owners to be New Zealand residents?
By limiting property ownership to New Zealand residents or companies majority owned by New Zealanders we would effectively be limiting the size of the property capital bubble to the capital reserve of New Zealanders. Recycling our own wealth rather than living on foreigners savings masquerading as local capital. Not only would this sharply reduce the silly growth in property prices now it will also prevent the enormous shock which will come when those foreign investors find something else and pull out by themselves.
Better a little pain now than a major depression later.

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