Shanghai widened its definition of "ordinary" or mass-market homes last week amid a raft of policy relaxation measures to speed up property sales as inventories rose to a record high. The move, on the heels of policies to make it easier to borrow from commercial banks and the city's housing provident fund, means homebuyers will pay less tax and qualify for cheaper loans. However, analysts said it would be unlikely to fuel a rapid pickup in home prices at this time. It followed a similar step taken by Beijing and analysts expect Guangzhou and Shenzhen will fall in line soon. These four cities are the only ones that still maintain home purchase restrictions which have been scrapped elsewhere on the mainland in the past few months. "This is the most forceful policy in Shanghai so far this year," Ding Yuzu, a co-president of real estate services provider E-House (China), said after the announcement on November 13. Huang Hetao, the research head of Century 21 China Real Estate, agreed but cautioned against being overly optimistic, citing high inventories and meagre mortgage rate discounts even though the new policy would boost short-term transactions. Centaline China data showed Shanghai's home stock rose to a record high of 13.5 million sq metres as of November 10. According to the new definition, effective last Thursday, a home of up to 4.5 million yuan (HK$5.7 million) in Shanghai's inner circle will be regarded as "ordinary", compared with a previous ceiling of 3.3 million yuan imposed in 2012. The threshold was raised to 3.1 million yuan from 2 million yuan for areas between the inner and outer circles of the city. Beyond that outer circle, it was increased to 2.3 million yuan from 1.6 million yuan. Using the new definition, ordinary homes would have accounted for 63.6 per cent of residential property transactions in Shanghai in the first 10 months, up from the actual 35.8 per cent now, according to consultancy Shanghai Deovolente Realty. Ding said primary-market homebuyers would have saved on deed taxes worth 500 million yuan in the first 10 months, and those buying from the secondary market could have paid almost 2 billion yuan less tax as buyers of ordinary homes are entitled to lower tax rates. The media have reported that some sellers in the secondary market have already defaulted on their contracts, as they wanted to raise the asking price even though they had accepted deposits from buyers. In the secondary home markets, buyers pay all taxes relevant to the transactions. Apart from paying less tax, first-home buyers of ordinary homes are allowed to put down a deposit 30 per cent of the transaction value, instead of double that amount or more. They can also access the cheapest mortgage loans offered by commercial lenders, up to 30 per cent below the benchmark rates under the current regulatory framework, although in reality it is more often less than 10 per cent now. The same will apply to those buyers who have cleared up their first and only mortgage loans. Multiple home owners do not qualify for these policies.