[lewis500]

Normally when markets have so much unsold inventory, prices fall to clear it out. But prices can be "sticky" and won't go down. All this unsold inventory makes you wonder why the prices are so sticky.

Here you can see one reason: "Shanghai homebuyers came out in droves to protest a developer's decision to cut prices in an apartment complex."

I'm sure there are others. Like if you're holding a loan for a giant apartment complex, and the owner cuts the price, it becomes immediately obvious that the loan is not going to be paid back in full. But say it's a 30-year loan: if you get the owner to keep the prices high and the units unsold a little long, maybe you can unload the loan onto some other bank or investor before the reckoning comes. Or maybe you're a bureaucrat who will be fired if the prices go down.

I have also heard that in China it can be difficult for person to rent out a vacant property. So people are holding onto empty units just as a store of value, like bars of gold.