I work in this area.
It comes down to land value.
Plenty of developers would prefer to build large, high quality and sustainable homes.
However, this does not create the most profit. The developers who can create the most profit can afford to pay the most for the land, and so are the ones who can buy and build their crap tiny boxes.
We have a shortage so they sell anyway.
The same goes for everything else you would like to see - large gardens, more light, more affordable housing and amenities. All adds to cost which reduces the amount you can pay for land which means you can't buy or build anything at all.
Take less profit then? It's a very risky business and construction costs are getting higher. A decent level of profitability needs to balance out the risk. Your investor and the bank providing the debt also need to see this profitability otherwise they won't lend/invest you any money.
What's the solution?
The government should put stricter planning requirements on size, level of affordable housing, quality. Crucially authorites should stick to these and not agree to flex them just because too much has been paid to secure the land. Result, land prices come down and better housing is built.
Obviously its not really as straightforward as that.
Local authority planning departments are hugely underfunded and can't deal with the existing workload let alone put together proper strategies for where and what should be built. And if they don't have these it's a free for all.
Also doesn't work in lower value areas where cost of land is low and grant funding required just to make it possible to build.
So, that's why we don't have enough space to dry our clothes.