Artificially restricting supply seems to be the function of zoning laws and similar. If laws governing a property preclude the building of and usage as, say, high-density housing, then the supply of high-density has been restricted by regulation. Consequently, prices for property that has been enabled for high-density goes up. And because the demand for high-density housing is driven by the greater pool of demand for housing of all kinds and there's less housing overall to go around, the price of low-density housing also goes up.

I don't know what's going on in any particular place but the potential for regulations to affect supply and demand is clearly there.