Gavin - reducing demand without increasing supply either means squeezing more people into smaller spaces or getting rid of people - I would not dare to guess which of those would be your preferred option for fear of provoking another series of rants.
Foreign investment in UK housing need not drive up prices, if it was investment to build rather than investment to purchase what is already built, and to profit from considerably taxpayer investment into the bargain.
It is correct however to see how the privatisation of social housing, opening up 2 Million former socially rented homes to be traded as a commodity by both UK and foreign investors, has drastically increased house prices and thus rents. Current cost levels are completely artificial in that they have little correlation with affordability and supply, or normal market conditions, but simply on what can be realised almost as if a stock market venture.
Thus, not only is RTB part of the problem, but is a primary cause of this unwelcome trade in peoples' homes.