Because the government restricts the supply.

That's true in most of the West, but if there are a bunch of half-completed buildings lying around, it's probably not the explanation in China.

Well half completed buildings are not worth anything if they can't be occupied?

You'd be surprised how much commercial real estate turned residential in Beijing illegally (e.g. Soho jianwai near guomao). I'm guessing there is a lot of residential supply, it just isn't on the market.