I live in Norway, and it seems to work just fine. The density isn't all that high compared to, say, NYC, but anyways there definitely are plenty of multi-unit apartment building, which suffer from the same organizational problems, that manage to survive fine as individually owned units. I am not qualified to speak too much on this, but anyways it's certainly a solved problem, and there should be plenty of templates from other places to build off of.
Are they also built and developed as a group, or is it via a main developer who buys land, builds the building and then sells the individual units? If that's so, the same sometimes exists here, but because regulations, zoning and permitting is so limiting, lengthy and onerous, the units built end up being prohibitive and quite limited in numbers. Which really doesn't help much solve the problem.
Hence why I think the issue isn't about taxing more for stuff like "not owner occupied", but more about the opposite: make it faster and easier and cheaper to build high density residences. Then prices will fall and the affordable market will be served by smaller developers.
