He had bought a 60 sq metre property in Sea Venice for about 400,000 yuan, which he intends to use as a holiday home before selling it on for a profit when a proposed high-speed train commences services to Chongming.

Prices at the project have already increased rapidly. Fan said his friend bought a similar sized property - part of a previous batch released for sale - for 300,000 yuan earlier this year.

The buying mania at Sea Venice came less than 48 hours after two other first-tier cities - Shenzhen and Guangzhou - rolled out a raft of new measures to cool home prices by raising minimum down payment requirements and introducing a more stringent threshold for non-locals to buy properties.

Alan Jin, a property analyst at Mizuho Securities, said: “They [buyers] were not so keen until this year. The project has been for sale for many years but sales in the past were lukewarm.

“But buying an apartment in Shanghai has become so unaffordable for the general public, and Evergrande’s Sea Venice has a big selling point of a low price starting at 350,000 yuan. This is an affordable investment for ordinary Shanghainese.”

Located at Qidong, Jiangsu has no restrictions on home purchases, said Wang Fung, a sales agent at Evergrande’s exhibition centre.

With such a small lump sum required, 80 per cent of units in the development were sold to buyers in Shanghai, he said, while some of the remainder were bought by people from Hong Kong , Japan and the United States.

Jin believes the recent buying fever in the mainland may place more pressure on Beijing to curb price growth. “The intense tightening measures announced by the local governments in the last few days means something,” he said.

Joe Zhou, head of research at JLL, said Shanghai’s government had ordered the cancellation of a property exhibition and trade fair on October 1 with the aim of discouraging buyers and damping soaring prices.

“The market is flooded with capital and has limited investment alternatives,” he added. “Investing in real estate is still the most favourable option among investors.”

Fuelled by spiralling land prices and a limited new supply of flats, home prices in Shanghai in August advanced 5.2 per cent month-on-month, or 37.8 per cent year-on-year, the fastest monthly growth among first-tier Chinese cities, according to the National Statistic Bureau.

Zhou said prices in Shanghai city centre had reached 100,000 yuan per sq metre.

“Cash-rich investors have been rushing to neighbouring cities such as Jiaxing, Hangzhou, Suzhou and Wuxi to look for a bargain,” he said. Prices in these cities - within one hour by high-speed train from Shanghai - have surged more than 20 per cent in a year, he said.

On Monday, Chengdu, Jinan, Wuhan and Zhengzhou announced new restrictions on property purchases. Other cities including Tianjin, Hefei and Suzhou also recently rolled out countermeasures to limit purchases as property prices jumped.

Albert Lau, chief executive of Savills China, predicted that prices would jump sharply two years after every new set of cooling measures was introduced by the mainland authorities.

“It becomes a self-fulfilling cycle. Shanghai is China’s finance centre, so people across the nation will invest here when they become rich,” he said.

Lau said increasing the land supply is the long-term solution to containing price growth. He said there was a looming property bubble everywhere on the mainland as a result of a home buying frenzy.

“But the question is will, or when will the bubble burst? Home prices may dip after a rapid increase. It may help to lose some air ,” he said.