That is in addition to price per square foot rise from building larger scale - while more efficient in infastructure and land usage it may start requiring things like seriously deep foundations and pilings as opposed to a stack of bricks and mortar as a foundation. However while a high density area may wind up more expensive than prefabs at the outskirts not building isn't going to make things cheaper until demand collapses. Essentially it is complicated - part raw goods-and-labor economics and part selfishness tragedy of the enclosures essentially.
But here is some recent proof that the actual current rental market in the US is an example of what I was saying: https://www.bloomberg.com/news/articles/2018-09-07/boom-to-b...
I do agree that there are inefficiencies in the market that mean high building prices don’t always lead to more buildings being built. But the cause is certainly not because there is too much indiscriminate foreign capital available. That’s like telling me candy bar makers stopped making candy bars because they were selling for too high of a price. Local building restrictions, permitting, high labor and material prices have huge impacts on whether a growing city will be able to build enough housing to keep rents low. All it takes for rents to keep growing is one more family moving to the city than new units have been built. In cities with increasing rents, has the population recently been growing or shrinking?
Ok, so why don't we see that happen in the real world? What you're saying is empirically wrong. So please supply an explanation of what's happening in reality.