TNAG-0735-FCO40-939-Policy-objective-for-the-developing-of-Hong-Kong-in-the-1980-1978 — Page 113

15:

(b) Pressure of domestic demand

But what is really worrying me, and obviously some

honourable Members too, is the present imbalance in the supply

of, and demand for, real domestic resources of land, labour and

capital. There is no doubt that demand is out-running available

supply with the result that prices are being competitively bid

up and, as a further reflection of this, retained imports are growing very fast, in fact roughly twice as fast as domestic

exports.

16.

The imbalance is particularly noticeable in the case

of the property market. I say this because there is no evidence that private sector demand for new property is yet being

satisfied. Consents to developers to commence work were 16%

higher in terms of floor area in the first nine months of this

year than in the same period last year, at a time when the

increase in the labour and material cost index is accelerating,

and at a time when the demands on the building and construction

industry have pushed the PWD's tender price index up by 23% in the first nine months of this year compared with the same period

last year.

17.

An important factor affecting the supply price of new private property is the growing demands being placed on the building and construction industry by the public sector, defined

in national accounts terms to include the MTR project. This

sector is now taking an increasing share of the output of the

industry: in the first six months of this year, public sector

expenditure on building and construction was 35% higher in real

terms than in the same period last year, whilst private sector

expenditure was only 8% higher. As a consequence, the public sector is now taking about half the total output of the building

and construction industry, compared with 42% in the first six

months of last year and an average of 39% over the four year

period 1973 to 1976.

/18.

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