Comment by LargeWu

The main reasons that international cash comes in is either speculation or offshoring money.

If the housing supply actually matched demand, the housing market becomes unattractive for speculation.

If foreigners are buying houses just to park their money, building more housing to meet the demand helps to alleviate that. This situation feels like a case where regulations designed to prevent housing supply from sitting empty can make sense but I have no evidence or story on how would need to be implemented to achieve that goal without negative unintended consequences.