> After you do all of that what happens if people still want to buy? Migrants come in, people are born? Homelessness I guess?

Easy, local government pay for new developpements according to their needs, and rent them at 1/20th of their cost (per year, a bit more to account for losses maybe) for at least 10 year, after which the familly/homeowner can buy the rest of the house.

> Why have a max of two? Seems arbitrary, why not one?

Finding the sweet spot implies trial end error. It's certainly not 1 and I suspect 2 is too restrictive unnecessarily. The relevant is to restrain housing from being a financial instrument not to repress people. If a person can't buy a dozen houses the demand (and consequently the price) will fall.