While the demand for housing rental swells in China's major cities like Beijing, Shanghai, Shenzhen and Guangzhou, several housing units in smaller cities remain uninhabited.

Consequently, rental prices soar in these top-tier cities especially Shanghai and Beijing while housing prices plunged in other cities.

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Experts fear that the market bubble has already burst especially now, where prices of a housing project in Hangzhou, Zheijang province dropped right after home buyers purchased their houses. 

The extreme situation between first-tier cities and smaller cities may indicate division in the housing market and underlined the wealth gap between the rich and the poor according to some experts.

In a China Daily's statement about the housing it said, "The geographical bifurcation can be attributed to uneven urbanization" due to "greater policy advantage" of first-tier cities.

The report also stated that the rise of price and demands in first class cities is tantamount to the city's population and productivity level.

"Public services and amenities are concentrated at the top of the urban hierarchy, leading to greater concentration of population in cities such as Beijing and Shanghai," in contrast to the  low-paying jobs in other cities that is "not conducive to any increase in housing prices," the report said.

Furthermore, the report also said that projects progressed without proper feasibility studies.

"The development of the housing market in smaller cities was detached from demand, which led to houses lying vacant in some new districts or ghost cities," according to the daily.