On the upgrade cost scaling a few people have run into here.
The symptom being described, that placing a new cottage makes upgrading your existing cottages dearer, reads like build cost and upgrade cost are both driven off the same counter, the number of that building you own, rather than upgrade cost being driven off the level of the specific building you are upgrading.
Splitting the two curves is usually enough on its own. Keep build cost keyed on how many you already own, so expanding still gets steadily dearer and the decision to sprawl keeps its weight. Key upgrade cost only on that building's own current level, so taking a level 1 cottage to level 2 costs the same whether it is your second cottage or your twentieth. Expansion then stops taxing investment, and you can tune the two curves independently.
Enjoyed the settlement growth loop. Good luck with the full release.