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Notes -
They do this everywhere they can. The justification in Sweden the municipalities use is that they have to sell the land at "market rate", which of course they are in complete control of...
It seems like the presence of places which do not do this then requires explanation.
I'm not aware of any place where the explanation isn't very simple and also not replicable for places this happens, especially since you become ever more path dependant as the market inflates.
More strictly, I'm not aware of any place that has fixed this issue though policy, and for good reason. The incentives are very strong for everyone that gets a say.
How do red states in the US(which are democracies and not particularly concerned with making life better for renters and young people at the expense of old people and owners) avoid this trap? For that matter, how does France?
During the early industrial era all the old buildings got covered in soot. Most countries tore down the old ugly buildings. France realized that they could power wash them and restore the old lovely architecture.
So the downtown core became a place for rich people to enjoy. When brining in refugees and poor migrants Protestant countries got this idea that the new arrivals deserve to live downtown. France was more elitist and decided to build towers in the suburbs for them.
So there's a long tradition where the government has the power build high rises in cities around the metro core.
Additionally people in Anglo countries refuse to think about HBD crime theories. So, at least in Toronto, people commonly believe that high rises cause crime. It ends up being sort of true, because lefty activists believe it's wrong to evict drug dealers and addicts. As a result it's impossible to build a new high rise and fill it with well behaved residents who happen to have a median income.
So French elitism traditionally protected the downtown while ensuring housing gets built outside the core.
In red states it's just that there is a lot of cheap land and no scenic views to be disrupted. So people don't fight new development.
In my experience of living in multiple Red areas that were (or are) undergoing development booms, it's that Red Tribe people generally are effectively YIMBY, or at least YIEBYBINMJTTYWTDWYL (Yes in everyone's back yard because it's not my job to tell you what to do with your land.)
As a very strong example, I once lived in a rural area gradually on the edge of becoming suburban. The state and county has long had a policy of "fence me out" in regards to animals. That is, if I have animals, and you don't want them to wander into your property, then fence me out. You can't make me build a fence, it's my land after all. There was a lot of conflict over this with the newcomers, and eventually transplants pushed to change the law. Locals never tried to block the new development, but they did try to block any changes that made things more restrictive or added rules. Eventually they were outnumbered, and now it's pretty typical city government with your standard NIMBY rules, and the culture I love continues to vanish.
It's one of the many reasons people say "don't bring California with you" when people move from more populous areas.
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