NEW home sales in Shanghai shrank last week because most developers were still reluctant to cut prices while buyers continued to wait and see.

Sales of new homes, excluding affordable housing, sank 20.1 percent week on week to 94,800 square meters during the week ended Sunday, Shanghai Deovolente Realty said in a report yesterday.

The average price of new houses fell 2.7 percent from a week ago to 21,538 yuan (US$3,378) per square meter.

Transactions of new homes costing more than 50,000 yuan per square meter fell 7.27 percent from a week earlier to 4,500 square meters last week, the realtor said.

"Some property developers were in a dilemma as they planned to cut home prices to promote sales but were afraid that buyers who had already brought their homes at higher prices may demand a refund or cancel their purchases," said Lu Qilin, research head at Deovolente.

Angry homeowners protested at several developers' sales offices in Shanghai over the weekend after some of them cut prices of residential projects by 25 to 30 percent in a bid to trigger sales and replenish capital amid the tight liquidity situation faced by them.

Several major domestic commercial banks last week raised mortgage interest rates for buyers of first homes, hitting sentiment of potential home buyers.