BEIJING - Just like what China's millions of homebuyers have long expected, a nationwide price cut in new home sales has finally begun, as increasing inventories and continued government curbs are pushing Chinese property developers to court more buyers.

China Vanke, the country's largest real estate developer by market value, led the wave of sales by lowering prices of their housing projects in Beijing and south Guangdong province starting this month.

In Beijing, new houses of Jinyu Vanke city in Changping District will be sold at 14,000 yuan ($2,204.7) per square meter in November, which is a 3,000 yuan's drop. It has attracted more than 600 house hunters.

At the same time, the company has also reduced the prices of its projects in southern Guangdong province by selling its Vanke Zitai, or Glorious Palace, in Dongguan at 13,000 yuan per square meter, down from the previous 15,000 yuan.

China's leading property developers are taking the same steps, with Agile Property, Capital Group, Evergrande and R&F Property, all reported to have cut price to reduce inventories and boost sales volumes.

But in Shanghai, the strategy of price-cuts seemed to have met obstructions.

When China Overseas announced a 30-percent discount on group sales promotion in its Scenic West Coast project late last month, more than 400 of its existing homeowners protested furiously and threatened to sue the company.

China Overseas' sales campaign did not last long, as local government has required developers to file applications to regulators before carrying out large-scale price adjustment, whether it's a rise or a reduction.

China Overseas was not the only property firm that has sparked disputes over house price cuts in Shanghai. At least four real estate projects that cut prices sharply were reported to have faced strong protests.

Increasing pressure

Despite pressure from existing homeowners, market analysts are expecting more price-cuts as declining sales and increasing inventory are putting more strain on property firms.

In September and October, only 10,743 homes were sold in Beijing, down 46 percent from a year ago. New home sales in the first ten months totaled 69,079 units, down 17.8 percent year-on-year, while second-hand home sales dropped 35.8 percent to 101,188 units, according to bjfdc.gov.cn.

According to the Centaline Property Agency, a supply of 9,152 new homes in October has added Beijing's total house supply to 118,000 units, a new high since June 2009.

It would take 22 months to consume the inventory even if there were no new supply, said the agency.

The total inventory of 131 listed property companies has reached 983.8 billion yuan, up 44.93 percent year-on-year. House inventory in the third quarter has increased by 12.31 percent from the second quarter, according their third-quarter fiscal reports.

Meanwhile, the 131 listed property firms are witnessing a negative cash flow of 63.25 billion yuan, down 16.37 percent year-on-year and down 19.31 percent from last quarter.

Further reductions

Zhang Yue, chief analyst with Home Link China, a leading real estate agency, said with large trading volume and strict government curbs, Beijing is seen as bellwether for the market.

"The intention of price-cuts will get stronger in the fourth quarter," said Zhang, citing figures that in Beijing, 53 of this year's 90 new residential projects have already started to offer discounts.

Zhang Dawei, analyst from the Centaline Property Agency, said the first-tier cities have come very close to the house price turning point.

"If the government continues to maintain firm curbs on the real estate market, house prices will reach a turning point in March next year," Zhang said.

Premier Wen Jiabao said last Saturday the government will continue to maintain its control over the real-estate market while seeking to fine tune other economic policies.

Average home prices in the country's 100 major cities fell for the second consecutive month in October to reach 8,856 yuan per square meter, down by 0.23 percent last month from September, said the China Index Academy in its latest report.

Chang Zhi, chief analyst of Century 21 China Real Estate, said he expects more real estate companies in the second- and third- tier cities to follow large firms' steps to cut house prices under the current policy.

"A new round of home-price declines may come in one or two months," Chang said.