Prices of new homes in Beijing fell 20.7 percent year-on-year in the first quarter, as property developers offered more discounts to stimulate sales with tightening policies set to continue.

The average price of new homes in Beijing was 12,326 yuan ($1,956) per square meter as of end-March, compared with 13,173 yuan at the end of last year and 14,147 yuan at the beginning of 2011, the Beijing Real Estate Association said on Sunday.

According to Chen Zhiwu, secretary-general of the association, 16,000 new apartments were sold during the first quarter, with 90 percent of buyers being first-home purchasers.

Apartment sales (excluding subsidized units) fell 14.2 percent year-on-year in the first quarter, reaching the lowest level since 2007, Chen added.

But as developers offer more attractive discounts, potential buyers' interest has grown.

During the just-concluded four-day Beijing Spring Real Estate Expo, an event that is often regarded as a barometer of the capital's real estate sector, developers offered all kinds of favorable terms.

Most discounts ranged from 2 to 6 percent, with some as high as 8 percent.

According to Zheng Xiangdong, head of Beijing JiaHua Four Seasons International Exhibition Co Ltd, the organizer of the expo, 145,800 people visited the expo, compared with 13,072 visitors to the Autumn Real Estate Expo last year.

About 80 percent of the visitors showed an interest in apartments, with the rest considering villas, office buildings and commercial properties.

As for potential buyers, about 30 percent would buy an apartment with a floor space of less than 90 sq m, while 50 percent preferred a home ranging from 90 sq m to 140 sq m.

The figures indicate that owner-occupiers, including first-time buyers and those who are trading up, now dominate the market, said Zheng.

For Zhang Dawei, marketing director of Centaline Group in Beijing, April is a traditional hot season for property sales, so the transaction volume is likely to pick up this month.

"But as the market is still quite price-sensitive, and as restrictions on home purchases remain in effect, we are not likely to see a rebound in both sales and prices," Zhang said. "This month may be a good opportunity for potential home buyers."

According to Qin Lihong, executive director of real estate company Longfor Group, the window of opportunity for property developers will not last long.

"As property sales pick up, the price is also likely to increase and that may trigger more tightening policies," Qin said.