THE current "wait-and-see" sentiment among home buyers in Shanghai might end in the next few months because real estate developers are becoming more flexible in pricing although there is no indication of significant price cuts.

"Home prices in Shanghai will likely fall modestly over the next several months, possibly by 15 to 20 percent, as developers are expected to seek a stronger cash flow and reduce prices in exchange for greater volume," said Michael Klibaner, head of research at Jones Lang LaSalle China, a major global real estate services provider.

"However, we don't anticipate further discounts as developers, who had enjoyed robust sales in 2009, are not yet under strong pressure to cut prices," Klibaner said.

Sales are also likely to rebound as the city's housing market enters its traditional peak season in September and October when buyers, especially first-time buyers, return to the market, the firm said.

The city's overall housing market registered near-record lows in May and June as buyers chose to stay on the sidelines to gauge the effects of government policies. The present talk of a possible tax on residential properties has further softened buying momentum, with the luxury housing market being grounded virtually to a halt.

"Prices of high-end residential properties are set to drop on weak demand from investors," said Lina Wong, managing director for east and southwest China operations at Colliers International.