The photos of so-called ghost cities do not show a true image of the real estate market outside the first-tier cities

Ordos in Inner Mongolia autonomous region and Changzhou in Jiangsu province have become synonymous with China's supposed housing market excesses. Pictures of parts of these towns show desolate apartment blocks and deserted streets, with accompanying stories of real estate market collapses. However, these pictures do not tell the whole story. Our research shows that Ordos and Changzhou are exceptions rather than rule for China's 200 or so small lower-tier cities.

Understanding what is going on in the smaller cities is becoming increasingly critical in assessing the impact of the real estate sector on China's overall economic growth this year. We examined the limited public data available for the real estate market and found that the situation in smaller cities is not nearly as bad as the situation in Ordos would suggest.