This effect is quite broken in many US markets. Developers are, for various reasons, building higher-density developments consisting almost exclusively of studios and 1-bedroom units.

Developers build what's profitable, i.e. what's in demand. And they don't have to build the thing you want to make more of it available to you. You want a big house, someone who currently has a big house just wants a place to live, so if someone builds them a 1-bedroom then they take your money, pay a fraction of that for the 1-bedroom and pocket the difference. They get the new unit and a pile of money and you get the existing bigger house.

That continues until demand for bigger units starts to outstrip demand for smaller units, at which point developers start building something else.