It doesn't have to be completely blind, the local council could have options to waive or adjust the taxes or the law could include ways to show the landlord is trying to attract tenants by lowering the rent or something. Also most of the places this is suggested for aren't significantly shrinking.

If the price of the services go down enough, that should cause people to move to your city, because it has cheap cost of living.

Well, I am going to move back next year, and indeed the reason is a combination of "much lower real estate prices" and "I can do my work remotely most of the time". But the second condition does not apply to everyone, so the job market will always play a role. My wife, for example, will probably make much less there.