It's easy to demonize and dunk on people for being greedy and just removing houses from the market, but as you well have stated, some people are not in a position to buy. So rent becomes the only true and logical solution.

Sure, they could well be down on their luck. But I would also present the case of the immigrant, new to a country (and having moved with a job offer), having no opportunity to sign for a mortgage (no credit history, didn't gather enough work time in the country to provide payslips). And even if they had a suitcase of money just lying around, it takes a bit of time to decide if you want to settle. The best one can hope for is finding a landlord who's not an asshat.

And no, other solutions proposed in the comments probably would not help, since, for instance, communal rentals tend to have long waiting lists or require some sort of reputation (like knowing some of the community) before allowing you to move in.