NZ banned foreign investors and average home prices are up about 50% in the couple of years since that happened.

Foreign buyers just don't make up enough of the market, and neither do people with 5+ residences.

The lack of any capital gains tax plays a big role in this case

The only reason people bother owning multiple dwelling units is because they're a "good investment" because there's more demand than supply.

Let supply outstrip demand and suddenly they're not a good investment anymore, so people go back to owning them for living in.

My parents own three, none of which they keep as an investment. One is their primary home, a second is their winter escape, and a third was supposed to be a place for my grandmother. But she died shortly after my parents bought it, and they can't be bothered to sell or rent it to anybody. So it's a storage unit now.

Not that this is a good use of a perfectly fine basic housing unit, but it isn't an investment.

So your parents are preventing two young families from starting their lives.

Seriously, a "winter escape"? Literally noone needs that. Literally noone should have that until everybody's basic needs are met.

Which won't happen with all these "storage unit" houses there are.

I don't necessarily agree that "nobody should have X until everyone has Y" is a workable general rule; no family should have two cars until everyone has one; no family should have two jobs until everyone has one.

The second home is already slightly tax disadvantaged compared to the primary residence, perhaps it should be "punished" more.

Which is why I assume the parent post mentioned 4, I would have said two or three myself (as your example shows).

If that third house had some form of tax penalty associated with it being unused/empty they might bother to sell it.

But the housing crisis isn't perpetuated by empty homes in general; empty homes exist because there's an investment aspect of it. If the grandma house was losing at IRS depreciation rates, it'd likely be sold (though a storage unit might cost a similar amount).

I keep trying to convince my parents to sell it. They're spending a lot of money on it for property taxes and HOA fees (it's a condo unit) but they simply don't care enough. On the bright side, it's in a town that hasn't yet been swept up by the housing crisis. Only a matter of time though.

What about renters? People who own multiple residences usually don't let them sit empty; they rent them out, and a robust rental stock is important in any city. Look at Montreal, for example. Most people rent, but someone has to own the buildings.

People don't rent for the fun of it, they rent because they can't afford a house. Pretty much anybody would be glad to swap paying rent for morgage payments. As it is, you often have the messed up situation of your rent going to pay somebody else's mortgage interest

Renting is not always just an intermediate step to being too poor to buy a home, it can be a freeing experience to not have the hassle of a home.

With WFH especially now you can work in various parts of the city or move all over the world and at most be tied down to a place for about a year.

Homeowners also never talk about things like paying tens of thousands of dollars when a pipe burst or the roof needs repairing.

That's not true. Owning a home is a hassle and ties you down. Like I said, most people in Montreal rent, and Montreal has some of the cheapest housing in Canada.

By “homes” do you mean buildings here or housing units? Because if it’s the latter, doesn’t that preclude most apartment buildings?