I think the problem is bigger than that. Consider the NYC housing market. Even though there's almost no vacant real estate, rents are always rising due to the constant flipping of property. I say flipping since most of these purchases don't fundamentally improve the property in any meaningful way. Moreover, this continues despite the city having one of the highest capital gains tax rates in the US.

If investors had access to an alternative asset class that allowed them to realize decent YoY appreciation without undertaking risky construction, demand would cool down significantly. The end result (in the long run) would be sustainable property values and affordable housing for the middle class.

There are alternative asset classes. There’s no market mechanism that can guarantee returns for any asset class. Even real estate takes hits once in a while.