XN000022-1994-08-26 — Page 7

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FRIDAY, AUGUST 26, 1994

IN LINE WITH THE STEADY GROWTH IN ECONOMIC ACTIVITY, OVERALL EMPLOYMENT SHOWED A FURTHER NOTABLE INCREASE IN THE FIRST HALF OF 1994. THE SUSTAINED STRONG DEMAND FOR LABOUR WAS NEVERTHELESS MATCHED BY A RELATIVELY MORE ABUNDANT LABOUR SUPPLY. EARNINGS IN THE MAJOR SECTORS CONTINUED TO RISE SIGNIFICANTLY, EXCEPT FOR TRANSPORT, STORAGE AND COMMUNICATION WHICH RECORDED A DECLINE IN REAL TERMS. NEVERTHELESS, EXCLUDING THE IRREGULAR PAYMENTS IN EARNINGS, WAGES IN THE TRANSPORT SECTOR CONTINUED TO SHOW A NOTABLE INCREASE BROADLY IN LINE WITH THOSE IN OTHER SECTORS. MEANWHILE, CONSTRUCTION WAGE RATES HAD A SMALL INCREASE IN REAL TERMS.

THE PROPERTY MARKET

FOLLOWING A PERIOD OF HECTIC TRADING AND FURTHER PRICE UPSURGE IN THE FIRST QUARTER, THE RESIDENTIAL PROPERTY MARKET COOLED DOWN CONSIDERABLY IN THE SECOND QUARTER. THE HIGHER PRICE LEVEL AND REDUCED AFFORDABILITY OF FLATS HAD SET IN ΤΟ RESTRAIN DEMAND. SENTIMENT WAS DAMPENED BY THE ANTICIPATION OF NEW GOVERNMENT MEASURES TO CURB SPECULATION AND STABILISE THE MARKET. IN ADDITION, THE MORTGAGE RATE OF THE BANKS WAS RAISED FURTHER IN LATE MAY, ALONG WITH THE RISE IN LOCAL INTEREST RATES. AS A RESULT, FLAT PRICES EASED BACK FROM THE PEAK IN MARCH. A PACKAGE OF MEASURES FOR THE RESIDENTIAL PROPERTY MARKET WAS ANNOUNCED BY THE GOVERNMENT IN EARLY JUNE, WITH FURTHER DAMPENING EFFECTS. MEANWHILE, FLAT RENTALS CONTINUED TO RISE THROUGHOUT THE FIRST HALF OF 1994.

ON COMMERCIAL PROPERTY, THE DEMAND FOR OFFICE SPACE REMAINED GENERALLY STRONG, WITH SIGNIFICANT INCREASES IN BOTH PRICES AND RENTALS DURING MOST OF THE FIRST HALF OF 1994. THE RENTAL INCREASE FOR PRIME OFFICE SPACE IN CENTRAL AND ADMIRALTY WAS PARTICULARLY MARKED, OWING TO AN ACUTE SHORTAGE OF NEW LETTABLE SPACE IN THESE AREAS. AS TO SHOPPING SPACE, RENTALS SHOWED FURTHER INCREASES IN THE FIRST HALF OF THE YEAR PARTICULARLY IN THE POPULAR SHOPPING DISTRICTS. THE RISE IN PRICES WAS HOWEVER GENERALLY MORE MODERATE.

ON INDUSTRIAL PROPERTY, THE MARKET FOR CONVENTIONAL FLATTED FACTORY SPACE REMAINED GENERALLY QUIET IN THE FIRST HALF OF 1994, AFFECTED BY THE ONGOING RELOCATION OF MANUFACTURING PROCESSES TO CHINA. BUT NEW INDUSTRIAL BUILDINGS DESIGNED ALSO FOR OFFICE USE CONTINUED TO FACE A GOOD DEMAND, WITH FURTHER INCREASES IN PRICES AND RENTALS.

THE FINANCIAL SECTOR

THE RISE IN U.S. DOLLAR INTEREST RATES IN THE FIRST HALF OF 1994 HAD LITTLE EFFECT ON THE MARKET EXCHANGE RATE OF THE HONG KONG DOLLAR, WHICH REMAINED GENERALLY STABLE UNDER THE LINKED EXCHANGE RATE SYSTEM AND MOVED NARROWLY BETWEEN HK$7.723 AND HK$7.749 PER U.3. DOLLAR.

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