Indemnificatory housing programs—a kind of state-backed urban low-end and nonmarket housing programs which used to be welfare—have now increasingly evolved to be the vehicle to promote capital accumulation. Most of these housing communities show peripherization with high rates of unemployment, low income, poverty, and social exclusion, which violates their sustainability. This paper examines the impacts of land-centered urban transformation on indemnificatory housing communities, and analyzes the causes of unsustainable outcomes in political economy discourse. To achieve this, the social and economic conditions of a longstanding suburban indemnificatory housing community in Nanjing were analyzed. Survey data collected from March to April 2016 was evaluated to determine the peripherization of the residents within it. We found that for many residents, high rates of unemployment, low income, and poverty were mainly caused by their individual demographic and socioeconomic disadvantages, with the peripheral physical and social location contributing by exacerbating their vulnerabilities. It is concluded that local governments’ land-centered urban transformation and the central government’s affordable housing policies aimed at social and economic crisis mitigation combine to produce suburban indemnificatory housing communities, driving low-income relocated residents into more disadvantaged situations. This finding creates important lessons for the sustainable development of Chinese indemnificatory housing communities.

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