Housing lottery was a player idea, it got a lot of backing because people were tired of clicking placards or waking up at 3am after maint and hoping they beat hundreds of others getting online and to a housing plot they wanted. It's the same as the auto-demos taht we have: player suggestion. There's a reason that after something like
FFXI's Pandaemonium Warden making people physically ill from a straight 18 hour fight the devs decided "hmm, maybe not having our random housing timers to cut down on resellers and people loopholing is a good idea since people are doing what they did for PW... and we should do something else."
It's not healthy for people.
I've talked about this before elsewhere, but the downsides to instanced/unlimited wards is the fact that they'd likely cut down what you can actually do with a house from what we can do now. I talked about LOTRO's unlimited wards
here, though tbf to LOTRO their servers are from like, 2008, but the extreme limitation on what you can have in your house can be frustrating at times. I feel that XIV would have a similar limitation with that if they had an unlimited ward system. Instanced I think other people have covered on how they'd have to change it and issues arising from it, but XI has it and has had it since 2002 or so. It has its own limitations (unchangeable walls, shape of the house is set, no partitions only furniture, no true yard but you can buy a patio add-on for gardening, if you have the Adoulin xpac you can have access to the Mog Island which is a much smaller version of our own Island Sanctuary) so we'd likely have the same problems. Each side has a pro and a con and I don't think most think of the cons to either of these suggestions, just the pros that everyone will have access to a house, which is great! But would that be worth it for most if their ability to decorate and have access to what housing does now is diminished from a slight diminish or a severe diminish?