And the real-world reason never seems to be "it would be expensive", as something even more expensive is done in its stead.
From what little we learn in the TNG Tech Manual, the Yacht would have been done using the standard cabin set. The same wall curvature is there, the same window shapes, the same dimensions. Picard's table would just have been replaced by a helm console of some sort, apparently.
Might have looked silly. Might have been really cool if the miniature work were good. And if the thing was a success in TNG, it could have been done in more splendor with CGI and virtual sets in the TNG movies. But of course nothing ever came of it.
At least we have Probert's cool artwork of that which never was (incidentally, with what looks like phaser strips and recessed warp engines!).