A recent buyer of a new home in Tongzhou told China Daily that when he recommended the project to a friend, they found that a 150 sq m home now cost 4.5 million yuan, compared with 4 million a month earlier.

Brokers and sales representatives unanimously said the talk is true and prices will rise on the official announcement. Nobody knows for sure, however, how much prices will increase.

Demolition is already underway in Lucheng, a town about 8 km east of Tongzhou's central area. Local villagers said they have completed the registration change from rural to urban residents and will move to new homes the government has built for them. "We're making way for the Beijing government," one villager said.

Experts warned that the relocation rumor has been around for a decade, and every time it is revived, developers exploit it to push up home prices.

For example, in 2010, there were reports that the central business district, which is near the eastern Third Ring Road, would expand eastward and Tongzhou would become an "international new city".

"Tongzhou has experienced several 'exciting concepts' in the past few years, which have driven prices up several times. Prices have been flat since 2012, hovering around 30,000 yuan, despite price gains in other parts of Beijing," said one online commentary.

Oversupply will be a major factor to deter any price surge, analysts said. According to website Netease Property, more than 40 projects are on sale in Tongzhou, not including those under construction.

Wanyan Wenhao contributed to this story.