China’s cities are being populated quickly. It’s common for third-tier and second-tier cities to experience double digit population growth during a single year. Puyang has been experiencing 15 – 20% population growth each year for several years now. Apartment buildings are being erected at a staggering speed. However, a lot of overbuilding has taken place, particularly in third-tier cities.
It is quite common for new apartment buildings to remain nearly vacant for many months. Citizens in third-tier cities often can’t afford a new apartment. There have also been a number of real estate scandals in China. Developers have collected money for new apartment units, only to flee with the cash after construction begins.
One of the main reasons for overbuilding has to do with rich Chinese buying numerous apartments as investments. Investing in real estate has been particularly popular among government workers who became rich through corruption. In order to hide their purchases, these despicable individuals would buy the apartments using fake names. In many municipalities, laws have been passed limiting the number of apartments an individual can buy to two. Also, many municipalities require that the person buying the home use his or her real name.