I think there are enough challenges that making new housing optional pretty much guarantees it won't happen, so the government mandating it forces people to either find a compromise they're happy with or end up getting ignored.
Yep, importance wise, it's build or die imo.
Find a compromise or lose all of the environment / your backyard, that has to be the tone from the government for things to move.
Regulation to reduce 2nd home buy to lets, significant increases in yearly fees on such properties, tax on unoccupied housing can all be used to right-size the housing stock.
Obviously immigration is inextricably linked to housing as well, which has to be planned for if you wish to avoid becoming Canada.
None of these things are insurmountable, unfortunately even if you make exceptional progress on this issue, it's far too easy for various groups obsessed with their own interests to get you out at the polls next.