> The free market would have developers building housing here.

... for rich people, not the poor. There is no profit in building affordable housing when one can extract ten times the value from luxury building.

My father was a builder (albeit in a different country) but affordable housing (or standardized apartments) are actually a builder favorite. They are quick to turn around, no architects involved and require smaller capital outlays/financing. Sure he might make less but it's easier money. As long as some one is paying I think the free market will build it.

You can do affordable housing when the building ground is cheap. Once you hit a certain floor (Munich & Berlin routinely do), affordable housing simply is not financeable.