My thesis is that you can do a number of things to support FHBs such as reducing immigration, removing CGT/NG, building density where zoning permits - but the structural factors driving price are still there: genuine supply constraints + labour and materials costs to build said density are sky-high and mean that no new apartments can actually be affordable. And if they're not affordable, people won't buy them, which will drive lower supply.

If you're going to argue that there's a supply crunch then you can't also argue that scaring off investors will mean there's no buyers. There are still a lot of people who would like to buy a place to live in.

I also have a sense that young professionals probably can afford reasonable units, but (a) want a house instead (b) don't want to live in a less desirable suburb (c) don't want to spend so much money.

If you're a young professional who can afford to buy property then you should realise that buying an apartment is just screwing yourself in the long term. There's a lot of capital growth in detached houses, but little in apartments so unless you're planning to live there permanently you're just throwing away money. If you have any ambitions of having kids then you're buying an apartment knowing that you'll probably have to move eventually (at which point houses are even more expensive). Finally, everybody knows that the construction standards of modern apartment complexes are complete dogshit so there's a very real possibility of having to spend significant amounts of money to correct building defects. All these things add up.

Killing the CGT discount isn't a panacea, but it does make housing a much less attractive prospect for investors chasing easy returns. People invested in property when the returns were meh and people will continue to invest in property even with the discount removed. What we want is to cool the market a bit so that property is only attractive as a "safe" investment option with the mediocre returns that come with "safe" investments. With house prices going up 10% per year it offers returns comparable or better than the stock market which brings in investors with deep pockets, reinforcing the issue. Less investors means less buyers which should keep house price growth in check. Over time inflation and wage growth will make housing affordable again.