That might very well be, but now people evidently seem to prefer not doing that, so what is your point?

"Just stop preferring that"? Good luck enforcing that.

It is not about preference, but because of regulation. Nowadays the government demand is that each child needs to have a separate studying and sleeping area. If a sliding wall in a room counts as a separate area is up to the officials' discretion.

On one hand, all of this is understandable, but on the other hand these policies do indeed raise the cost of having children.

That still works up to like age 7. It really is needed for that age up to ~18, which means you can get with providing that service for ~15 years (multiple children) and then going back to smaller apartments.