There are tons of natural limitations in all kinds of things and all sorts of Markets - which is why Free Market Theory is mainly bollocks: the conditions for it to work as advertised exist only in a handful of Markets.
In Housing, clearly Land is the main limiting factor in places like cities and surrounding suburbia, though if that was removed we would eventually run against other limiting factors, probably on some kinds of building materials or manpower (hence my mentioning of both), though all that could be overcome with time whilst Land limitations, although made worse by Landownership laws, are ultimatelly down to there not being possible to make any more of it (though different work patterns could make it be much more efficiently used if they weakenned the need for people to live in and around cities).
Also keep in mind that land usage efficiency can be increased by building more multi-story housing, though in the current situation with land ownership that possibility just gets translated into higher land prices, so in places like the US you end up with sprawl rather than medium density housing: the whole economics of Land and thus housing pricing make a bigger and nicer living place far from a city center be the same price or cheaper than a crummy appartment nearer the center, even though were land was used with higher efficiency and dwelling size is smaller the price per dwelling should actually be cheaper.
Even in space I expect there will be some areas that are most desireable than others because of proximity to resources and markets. Increasing density is something I am very much in favor of but as you correctly pointed out this mostly leads to higher land prices which represent value captured by the ownership class as explained by the Iron Law of Rent.
There are tons of natural limitations in all kinds of things and all sorts of Markets - which is why Free Market Theory is mainly bollocks: the conditions for it to work as advertised exist only in a handful of Markets.
In Housing, clearly Land is the main limiting factor in places like cities and surrounding suburbia, though if that was removed we would eventually run against other limiting factors, probably on some kinds of building materials or manpower (hence my mentioning of both), though all that could be overcome with time whilst Land limitations, although made worse by Landownership laws, are ultimatelly down to there not being possible to make any more of it (though different work patterns could make it be much more efficiently used if they weakenned the need for people to live in and around cities).
Also keep in mind that land usage efficiency can be increased by building more multi-story housing, though in the current situation with land ownership that possibility just gets translated into higher land prices, so in places like the US you end up with sprawl rather than medium density housing: the whole economics of Land and thus housing pricing make a bigger and nicer living place far from a city center be the same price or cheaper than a crummy appartment nearer the center, even though were land was used with higher efficiency and dwelling size is smaller the price per dwelling should actually be cheaper.
Even in space I expect there will be some areas that are most desireable than others because of proximity to resources and markets. Increasing density is something I am very much in favor of but as you correctly pointed out this mostly leads to higher land prices which represent value captured by the ownership class as explained by the Iron Law of Rent.