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..."Supply and demand: thats how the market works, more or less, when regulation doesnt come into play."

It still works, especially when regulation is in play. That's their problem.

And I am not against "regulation"; regulation is necessary for us to function efficiently and harmoniously as a society.

But you can't have development or density restrictions without a market reaction, which in this case is high rent.

And if infrastructure is inadequate to handle these units, perhaps the city need to re-price how they deliver such services, which might possibly make these units economically nonviable.