> Housing development is antiquated and the only group benefitting is the real estate development and building industry, who in fact have every incentive to restrict the supply.

There is another group benefitting from high building development costs: all current owners of real estate. If new housing would become cheaper, existing property would also loose value. And there is enormous amount of money in existing real estate.

Many business and individuals would be loosing a lot of money if society/politics would really create cheaper housing, i.e. by enacting policies that increase density, lower cost of land, or limit rents.

I think the fundamental force of existing valuations working against lower prices is much harder to overcome than high construction costs.