[artsytrashcan]

"New development" covers a wide range of development types. Most of the types that are "allowed" to be developed - per regulation, public investment, what does and doesn't trigger the NIMBY predatory instinct - are types that raise "market rates" like low-density SFH and luxury condos.* The government could "radically incentivize" developers to build high-density housing with basic finishes and fewer amenities, to be sold or rented at affordable rates, but that bumps up against https://news.ycombinator.com/item?id=36632171's impeccably correct observation: prices are high because the people who own the housing stock want them to be high. Inventory influences a fraction of the cost.

*(That is, however far you're convinced that there even is a market; for rent, thanks to "discounts" that allow property owners to avoid actually advertising lower rates, supply and demand don't exist, only the imperative to raise rates annually.)