It's a great idea, just not a palatable one. People just tend to be irrational when it comes to the concept of taxation.

Now that I think about it more, land is actually the one asset in this game that doesn't depreciate at all, which is partly why it's so lucrative. With gear for example, you get taxed via repairs (even though the actual amount is inconsequential), and it depreciates with every new patch forcing you to gear up again and purchase new materia. Housing on the other hand is fixed in quantity so it's value never decreases, it has no upkeep so you pretty much just need to buy it once and you 'win' forever.

I do not see unlimited housing becoming a reality in the conceivable future. With how much server capacity seems to be an issue, I think it's naive to expect otherwise.