Construction costs don't scale linearly with rent prices, it's a different market altogether that depends on regulation/worker supply/material costs/equipment/etc.
As long as construction costs remain below the value of the units all-in, there's profit motive for developers to build.
> As long as construction costs remain below the value of the units all-in, there's profit motive for developers to build.
Not true
Real estate development is extremely capital intensive and therefore it's a question of all-in cost of capital compared to other investment opportunities.
The opportunity cost has already factored that in. Unless you think cost calculations are arbitrarily forgetting to include certain costs for no reason?
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