Prices of new homes in Beijing fell 20.7 percent year on year in the first quarter of 2012, with property developers offering more generous discounts to stimulate sales against the backdrop of continuous tightening policies.

The average price of new homes in Beijing was 12,326 yuan ($1,956) per square meter in the first quarter, compared with 14,147 yuan ($2,245) at the beginning of 2011 and 13,173 yuan ($2,091) at the end of 2011, according to the Beijing Real Estate Association.

Transaction volume also shrank with apartment sales (excluding affordable homes) falling 14.2 percent year on year during the first quarter, the lowest level since 2007, said Chen Zhiwu, secretary general of the association.

In order to attract potential buyers' interest, real estate developers have offered certain incentives. During the Beijing Spring Real Estate Expo (April 8-11), a barometer for the city's real estate sector, developers offered discounts ranging from 2 percent to 6 percent, with some as high as 8 percent.