There are still loopholes in these rules that can impact it, both of the legal and illegal variety.
For example having a suite in a house usually doesn’t cause capital gains to apply, but it’s partially an investment property at that point. This can be argued all the way up to almost a duplex level of “suite” in some cases.
One of the things people fail to realize is that the supply/demand curve isn’t just for the actual housing. There’s also demand from a strictly financial perspective. If I have an opportunity to make money off simply living in my home, and I can borrow money to make that money, why would I not try to maximize that profit by buying more than I need.
This causes people to pay more for housing than they otherwise would, because they expect to make a return on it regardless. I’m guilty of this myself, my family of 5 owns a house far larger than we need, and we’ve seen appreciation of about 400k in the 3 years we’ve lived here. If we had bought a smaller home, that would have been a smaller increase.
Unfortunately I don’t expect the government to fix this problem anytime soon and if that happens at least there’s even enough space for my kids to live here (even with partners potentially) well into their adulthood.