There is very much evidence that building more housing decreases the price of housing. I'm not sure why you think there isn't. https://www.upjohn.org/research-highlights/new-construction-...
Because the most people want to live there and population is growing?
There are plenty of high density old towns all over Italy that are dirt cheap because nobody wants to live there anymore. You can buy a whole house for $10 in a town built for such high population densities that streets are a meter wide.