And if margins are decreased, then... (what happens to new supply?)

The supply of land is inelastic. Property developers can't get more land by building more houses on it (and as a corollary, the eventual owner also do not get charged more in taxes).

	▲	sapphicsnail 3 hours ago \| parent [-]
		They can make higher density buildings that generate more income and house more people on the same amount of land.