I believe in a variation of your statement: we should stop making already dense places ever more dense.

It's that dynamic that makes it an impossible problem to solve. Even if you temporarily add new supply, it will immediately be consumed, and new demand keeps coming in. Every small step of new supply will be ever harder to achieve, and the quality of life will get ever worse.

It's a total dead-end.

Instead, reorganize society. Instead of 3 mega cities, have 20. Have a 100, across different tiers. Reconsider where work is organized.