REAL estate developers and home buyers should seek settlement through negotiations when disputes involving property purchases arise, and are encouraged to go through a judicial process to resolve the conflicts, the Shanghai government said yesterday.

The remarks came in response to conflicts between real estate developers and homeowners that occurred in recent days at several residential projects across the city, with frustrations sometimes leading to violence.

Hundreds of angry homeowners flocked to sales offices at three residential projects around the city - one in Pudong New Area and two in Jiading District - over the past weekend, seeking refunds or cancellations after learning that developers had slashed prices by 20 percent to 30 percent as they fight against ever-tightening capital flow.

A woman surnamed Kong who bought a house before the discount was created was among those irritated.

"My house is to be delivered in March and I haven't even gotten the key yet. But its price has already dropped," she told Xinhua news agency.

Similar episodes have been reported in the cities of Beijing and Hangzhou, where housing developers, pressed by a financial crunch and a sales slump, have moved to spur sales, Xinhua noted.

While home price is settled in contracts signed by both developer and buyer and is often a reflection of the supply and demand in a market, developers must always obey strictly the "one-unit, one price" rule and remain subject to public supervision, Xu Wei, Shanghai government spokesman, told a press conference yesterday. The rule requires transparency on the part of developers, so that prices are open for everyone to see.

On Wednesday, homebuyers again besieged a developer's sales office in Jiading, demanding their money back without success.

Representatives of Greenland Group and China Overseas Property (Group) Co , two of the three developers involved in recent price disputes, have said homebuyers should go to court if they continue to demand cancellations.

The city government said yesterday that it has intervened in an effort to help developers and homeowners reach a peaceful solution based on laws and regulations.

Industry analysts said significant price cuts will not likely prevail in the local market anytime soon. Discounts offered at most of Shanghai's new residential projects are between 5 percent and 10 percent.