3
The Economy
The Property Market
With abundant liquidity, exceptionally low interest rates and a tight demand-supply balance of flats, the residential property market was buoyant during most of 2012. After entering the year on a soft note, the market picked up momentum from February, with sentiment reaching a high in September upon the announcement of another round of monetary easing measures by the US Federal Reserve and other central banks in the major advanced economies. The market showed some cool off in November and December after the Government announced the enhanced Special Stamp Duty to further curb speculation, and the Buyer's Stamp Duty to manage demand from non-local buyers.
Reflecting the upbeat sentiment throughout most of the year, overall flat prices in the fourth quarter of 2012 surged by 24 per cent over a year earlier and overall flat rentals rose by 10 per cent. Following the surge since mid-2009, overall flat prices in the fourth quarter of 2012 were 33 per cent above the peak in 1997, and overall flat rentals were also 8 per cent above the peak (Chart 14).
Chart 14
Index
240
220
200
180
160
140
120
100
80
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Prices and Rentals of Residential Property
(1999=100)
Price index
Rental index
Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct
2008
2009
2010
2011
Both flat prices and rentals surged further.
2012
Residential property transactions gradually gathered momentum from February, before plummeting to very subdued levels in November and December. There were 81,333 sale and
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