So... the assumption is that left to itself, a good which is incredibly scarce in a market full of wealthy, fiercely competitive customers would see a price decline?

I mean, I can sort of see a long-term argument for it (the people who would occupy the housing are dependent on a much larger and much less wealthy serving class for their food and other necessaries and luxuries, and as that serving class was priced out of being able to live anywhere within an increasingly-large radius, housing would begin to become less attractive and thus prices would finally come down at least a bit). But I highly doubt that's the argument attempting to be made here, as one of the goals of rent control is to shortcut to the end of that cycle (where costs have come down enough that the serving class can afford to live nearby again).