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CHANGSHA, China/BEIJING (Reuters) - Property speculators in China are looking for the next big thing beyond the country's major cities. And they may have found it in the inland city of Changsha.
Shanghai, Beijing and Shenzhen have been the hottest property markets for most of the year, although smaller places such as the coastal city of Xiamen have been heating up too. Now there are signs the wave is reaching further inland.
Until now, Changsha's home prices have been one of the lowest among central provincial capitals due to ample land supply, a more leisurely economy compared with its bustling coastal cousins and subdued local demand.
But prices have jumped in recent months, catching many local property agents by surprise.
"Prices have risen 2,000 yuan ($299.84) per square meter on average in the past two months. That's almost a 30 percent rise from July," said Hu Yi, marketing manager at Central Courtyard, a residential project in Changsha targeting mid- to high-end buyers.
The sharp price rises in many cities are raising some uncomfortable memories of the last big run up in home values, which resulted in a property bust earlier this decade.
China's southern boomtown of Shenzhen, with tight land supply and a fast-growing tech industry, has led the rally for most of the year. But it lost its top slot in August to the second-tier city of Xiamen where prices were up more than 40 percent from a year earlier.
Prices rose in 64 of 70 major cities from the previous month, the highest in two years, government data shows.
There are even flickers of life in Zhengdong, a district of the inland city of Zhengzhou that became a symbol of China's property excesses because of rows of empty housing developments.
China property investment is also rising. Shortly after the August home price data was released, a parcel of land sold for a record price in southern China, the Shanghai Securities News reported.
Mortgage demand is driving loan growth in July and August. Indeed, the value of new mortgage loans is almost 70 percent of the value of total property sales in 2016 so far, the highest since mid-2009, UBS analysts said, citing figures from data provider CEIC.
The government wants to keep the property sector as a driver of economic growth as other areas splutter, so has an incentive to allow healthy price rises. Still, some are concerned.
The central bank's chief economist, Ma Jun, was quoted earlier this month calling for steps to "curb excessive bubbles" in the property sector.
UBS Chief China Economist Wang Tao said it was time the government tightened credit conditions for homebuyers.
The price gains are a "self fulfilling prophecy," she said. "You buy when everyone is buying, that's the mantra. But at one point, prices are too high to find anyone to buy from you, and returns from rent are too low."
The government's "primary concern" should be to "limit the liquidity" in the property market, Rosealea Yao, an economist at Gavekal Dragonomics in Beijing said after the price data was released.
When China's property market saw similar price gains a few years ago, 47 cities imposed restrictions on home prices. This time around only half a dozen have done so, she said.
One factor driving speculators into the property market is moribund stocks. Benchmark indexes .SSEC .CSI300 have fallen 13-15 percent this year, although some of China's commodities markets are rallying strongly.
After Xiamen, the inland city of Hefei saw the second-biggest price gains in August, as out-of-town investors from Shanghai swooped in.
Now property speculators complain that even Hefei is too expensive, so they are searching for the next opportunity and have found Changsha, agents and buyers said.
Chen Xiaochuan, marketing manager with local residential property project Xiang-Shore Park said speculators make up about a third of homebuyers in Changsha.
They are mainly from first-tier cities such as Shanghai and Shenzhen, property agents said, but are also from Hefei, where home prices have doubled since the start of the year.
"They saw what happened in Hefei and thought to themselves, maybe Changsha will be the next Hefei," Chen said.
Despite claims by some property agents that the inventory of empty homes is dropping to record lows in Changsha, empty-looking apartment buildings are still a common sight.
China Index Academy data shows there are 126,945 homes, or 13.46 million square meters, sitting empty in Changsha.
"I came here alone, but met many fellow Hefei property buyers along the way," 40-year-old Hefei businessman Zhou, who only gave his surname, said as he listened to a sales pitch for a new development. Zhou said he already owns three properties in Hefei and some in Nanjing and Hangzhou, two cities near the east coast.
In Zhengzhou, the first Starbucks cafe in the Zhengdong district opened this month, surrounded by empty, shiny office towers and residential blocks.
The shop manager said business would pick up in coming months, thanks partly to the cafe's proximity to three residential property projects.
One of them is The Park, a high-end project developed by a subsidiary of Haima Automobile Group SZ.000572.
"We have already bought an apartment here, and we are looking to buy a second one," a woman who goes by her last name Wang told Reuters just outside of project's sales office.
Home prices in Zhengdong district have risen two-thirds this year to 25,000 yuan ($3,747.56) per square meter on average, sales manager Xu Zhou said. That is still less than half of Shenzhen's average price of $8,104.
"We see a flux of buyers from people outside of Zhengzhou, especially those from smaller cities in the same province," Xu said, who apologized for his raspy voice, which he said was due to one too many sales pitches.
And for Zhang Liyang, a sales manager at Greenland Group's HK.600606 Zhengzhou office, the price surge in the past few months came as a surprise, which meant missed opportunities as she was entitled to employee discount rates.
"Even we didn't expect the prices to go up this much," she said. ($1=6.67 yuan)
Reporting by Yawen Chen and Ryan Woo; Editing by Neil Fullick