If so, then everyone who has already bought an apartment and everyone who stands to inherit such an apartment will "lose" money or the opportunity to convert their real estate into money in the future if newer apartments are more spacious or nicer in any obvious way.

Real estate developers will have less difficulty selling the units that they build right now if buyers are confident that future apartments will not be nicer (and hence more desirable to future buyers) than the apartments that you're trying to fob off on them today.

It's a feedback mechanism that, unchecked, leads to what you find in HK: progressively slightly smaller, more unpleasant apartments being built with every passing year.