How does overcrowding affect the cost of necessities?
The way to answer this is to think about supply and demand. When overcrowding happens, there are (by definition) more people in a given area. When there are more people in a given area, there will be more demand for necessities. For example, more people will need to drive, causing more traffic and pollution and also driving up the price of necessities like gas.
Unless something is done to increase the supply of necessities in the area, this means that prices will go up. Basic economic theory tells us that an increase in demand (which will come about as the population rises) will lead to an increase in price.