Not sure, it's very workable for lots of other aspects of buildings.
Eg I don't think there's a legislation that floorplans have to be useful (and how would you even define that in the abstract). Yet, most buildings have quite reasonable floorplans.
There's some transaction costs in that its hard for the eventually consumer of the building to express all their preference to the builder. As you say, for some aspects the price signals can be weak.
More competition can help.
See also how it's pretty easy to find restaurants that serve tasty food, despite taste not being legislated nor regulated.
Eg I don't think there's a legislation that floorplans have to be useful (and how would you even define that in the abstract). Yet, most buildings have quite reasonable floorplans.
There's some transaction costs in that its hard for the eventually consumer of the building to express all their preference to the builder. As you say, for some aspects the price signals can be weak.
More competition can help.
See also how it's pretty easy to find restaurants that serve tasty food, despite taste not being legislated nor regulated.