ENG-1999 — Page 83

Chart 11:

Per cent

20

15

10

5

THE ECONOMY

Earnings and wages

(year-on-year rate of change in money terms)

Earnings

Wages

i

-5

Q1 Q2 Q3 Q4Q1 Q2 Q3 Q4Q1 Q2 Q3 Q4Q1 Q2 Q3 Q4Q1 Q2 Q3 Q4Q1 Q2 Q3 Q4Q1 Q2 Q3

1 1994

1995

1996

1997

1998

1993

1999

Labour earnings and wages moderated further in money terms in 1999, along with the ongoing cost/price adjustments in the local economy.

The Property Market

The market for residential property held stable during the first half of 1999, following a distinct pick-up in late 1998. Almost all the residential flats on sale were acquired by end-users, and speculative interests were minimal. With flat prices being kept down and with a more relaxed and more competitive mortgage lending policy being pursued by the banks, the affordability of home buyers generally improved. The announcement of further fiscal relief measures in March, the favourable response to the land auction in April, and the successive cuts in mortgage rate during April and May provided some additional boost. Yet overall sentiment was still moderate, as potential home buyers continued to be restrained by relatively high unemployment and moderating income. Transactions mostly took place in the primary market for pre-completion flats. In the third quarter, the residential property market quietened to a lower level of trading activity. But towards the end of the year, market sentiment revived somewhat, upon the successful conclusion of China's negotiations with the United States on its accession to the World Trade Organisation, improved overall economic situation, and buoyancy in the local stock market.

Flat prices moved mostly within a narrower range in 1999, after the sharp surge in 1997 and the severe downturn in 1998. During the first five months of 1999, flat prices on average edged up by 4 per cent. This was followed by a decrease of 9

per cent in the period up to November, and then a slight rebound of 1 per cent by the year-end. For 1999 as a whole, flat prices had a net fall of 5 per cent. As to flat rentals, they remained on an easing trend, falling by an average of 3 per cent during 1999. Compared with the respective peaks in the third quarter of 1997, flat prices and

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