I've been to part of the world without strong regulations and seen, first hand, what the unregulated capitalist housing market will deliver if you allow it. Dangerous dwellings, that are impractical, bread misery (particularly for families), and an endless race towards that bottom (since that's always the most "efficient" way to "store" people, and therefore most profitable for a developer).

It is very easy to make these glib "just remove regulation and let the problem solve itself" comments, without really addressing what that reality actually looks like. We aren't talking about a city of single family homes, we're talking about family homes largely no longer existing since lawns, property separation, "extra" rooms, "extra" walls, etc are all inefficiencies that will be eliminated by the market sooner or later.

So, sure, run housing like bananas or jeans but don't be surprised when dwellings start to look less like homes and more like a efficient storage medium for human creatures.