The market here is simple supply and demand.
It’s not, though, because there are two types of buyer, both with radically different constraints on pricing. A home buyer has to be able to afford the mortgage out of income. That’s a pretty simple variable.
But an investment buyer, if they have enough equity, can basically acquire properties sequentially at no “operational expenditure” cost. They’re making a big leveraged bet on house prices, not buying a home, and there’s a much less rigid ceiling on prices as the bubble inflates (prices go up, less homebuyers, more rental demand, higher rents, better yields, more investment buyers after ‘free money’, house prices go up, less homebuyers, more rental de… POP)