Wenzhou a case study of a property market taken over by speculators
Slide of the city's embattled property sector provides policymakers with a sobering view of what can happen when speculators take control
The mainland coastal city of Wenzhou is a sobering case study of what happens when home prices fluctuate out of control, and why it is necessary to crack down on the property speculators seen to be responsible.
"I don't see light at the end of the tunnel yet," said Zhang Hai, a businessman in his early 30s and an investor who once held five flats and two street shops.
Wenzhou people are entrepreneurial and have built business empires across the world. However, in the past decade they have become notorious home speculators, bidding-up prices wherever they saw an opportunity to make a quick profit.
Nowadays, however, they have largely disappeared from the market and some factory owners are suffering bankruptcies after production costs rose while global demand shrank.
The bursting of the housing bubble in cities such as Wenzhou and Ordos, which is located on a seam of rich coal mines, as well as home-purchase restrictions widely adopted by dozens of major cities, have curbed housing speculation.
The proportion of speculators - people buying for capital gain rather than self-use - has fallen to less than 20 per cent of all mainland home buyers from a record of between 30 per cent and 40 per cent in top cities. The decline is frequently cited by the government as a successful outcome of its property tightening campaign started in late 2009.