If desirability is not skyrocketing, why are people prepared to pay the property prices?

It is not views and weather, it is access to the startup environment, venture capital, tech talent and so on.

And some speculation. I see first hand a lot of high end apartments bought that sit vacant. Maybe the owners live in Asia or EU 9 months of the year, I dunno. But in some of the swanky towers downtown there are entire floors with at most one owner present year round.

In a normal market, I suppose speculation would help increase supply - by driving prices up, it would become more attractive to build. Of course if no building is possible, that won't work.

Nevertheless, there has to be a ceiling to the prices. If no space for living is available, eventually the tech companies won't be able to grow further because they can't hire more people.