You're completely right, it just drives up prices further... but they're vote winning policies and using these pots makes conveyencers a nice profit.
LISA specifically mentions that it has to be your first house anywhere in the world, so it is targeted at home ownership. People speculating shouldn't be able to take advantage of this.
Though LISA is pretty much useless in London. Good luck finding even a good 1 BHK under 450k inside Zone 4
It's a demand-side policy to what is a supply-side problem. If the demand is already there, and you induce more demand by providing subsidies, prices will go up. If you want to reduce prices you must either increase supply (building housing) or decrease demand (remove someone, hopefully speculators, from the market).
However, given housing has become a defacto investment asset for Americans and Canadians, I don't see this issue ever being resolved without a political revolution or an economic depression.
Is there a major economy where this is not true? In fact it becomes comical in some developing countries.
Cities in India have NY/London like prices for much worse infrastructure and much lower purchasing power.