An LVT is good, but conventional property taxes are still much better than most other forms of taxation. Conventional property taxes don't cause astronomical housing costs.

California for example is partially so dysfunctional because they don't have enough conventional property taxes.

Yes, conventional property taxes disincentise building, but not more than capital gains taxes or income taxes do. And in large parts of eg California houses only cost a small fraction of the land they sit on at the moment.