TNAG-1483-FCO40-2037-Economic-situation-in-Hong-Kong-1986 — Page 25

1.7

Increased economic activity and lower interest

rates have helped to stimulate the demand for property. Trading in the residential property market was active in the third quarter of

of 1986. Prices and rentals for residential

property, with the exception of large flats, have generally firmed up (paragraph 5.6). The demand for shopping space in

prime locations held firm, while the supply of office accommodation was tight in such areas as Central, Tsim Sha

Tsui and Wan Chai (paragraph 5.7). As regards industrial property, demand showed some increase following the revival in manufacturing activity (paragraph 5.8). On building

floor area on building plans

increased by 26% in the first

same period last year, and the

intentions, the total usable

with consent to commence work

nine months of 1986 over the

increase was substantial for commercial property

property (paragraph

5.9).

Inflation and the monetary aggregates

1.8

The rate of inflation remained low in the third

quarter of 1986. The year-on-year rate of increase in consumer prices, at 2.6% in the third quarter as indicated by

the Consumer Price Index (A),

was little changed from that

recorded in the previous two quarters, notwithstanding some

acceleration in the rate of increase in import prices since

the second quarter of this year.

Among the factors

contributing to this low rate of inflation, aggregate demand

in the economy was not imposing much pressure on the general

price level, world commodity prices remained soft, and the import prices of goods from China fell (paragraphs 6.1 and

6.2).

3

/1.9