Pardon my ignorance, but property owners have the most fixed supply possible - they're selling house space, it's literally nailed to the ground. To paraphrase the root comment, the prices are set by how much tenants are willing/able to pay. Higher property taxes mean investors take less profit from housing, which means it takes longer for them to save enough rent money to buy more properties to lease. And therefore less money with which to drive up the bidding war prices.