Earlier quoted context omitted.
Diluting their own market
To follow your line of thought would require massive collusion between every investor to agree on how much each person builds to avoid dilution. That is so complex as to be functionally impossible. The far easier explanation is the one in the article.
There isn't really collusion, all the developers know which side their bread is buttered on. All the major developers in the UK are the biggest Conservative party donors and they run on restricted development, nimbyism, and keeping house prices high no matter what.