ENG-2002 — Page 96

THE ECONOMY

64

Property transactions, as measured by agreements for sale and purchase of property registered with the Land Registry, shrank by 3 per cent in number in 2002. The decrease was concentrated in the second half of the year, outweighing the increase in the first half. In 2001, there was a rise of 3 per cent. In total value, property transactions were also down, by 4 per cent in 2002, which was nevertheless smaller than the 13 per cent drop in 2001. Analysed by main type of property, transactions in residential property rose modestly, by 5 per cent in number and 2 per cent in total value in 2002. The increase occurred mainly in the first half of the year. By contrast, transactions in non-residential property contracted considerably, by 30 per cent in number and 26 per cent in total value in 2002. There was a much larger decline in the first half of the year than in the second half (Chart 19).

Price Movement

Overall consumer prices continued to decline in 2002. By December, overall consumer prices had fallen for 50 consecutive months. Though with some relative narrowing towards the year-end, the decrease for 2002 as a whole widened considerably from that in 2001. This reflected mostly the influence of domestic factors. In particular, there were the special relief measures of rates concession and waiver of water and sewage charges implemented by the Government during the year. Also, domestic costs were lessened by softening in both labour wages and property rentals. Meanwhile, local retailers cut the prices of their goods and services further, in face of slack consumer demand and keen competition in the retail market. On the external front, while import prices stayed soft in overall terms, the decline moderated over the course. of the year, upon a weaker US dollar and a rebound in world commodity prices.

For 2002 as a whole, the Composite Consumer Price Index went down by 3.0 per cent, nearly double the 1.6 per cent fall in 2001. There was an enlargement in the year- on-year decrease for most of the year, from 2.6 per cent in the first quarter to 3.2 per cent in the second quarter and further to 3.5 per cent in the third quarter. To a large extent, this was due to the two rounds of rates concession as well as the waiver of water and sewage charges granted as from the early part of 2002. (Discounting the effect of these special relief measures, the decline widened only modestly over the period.) Also relevant were further reductions in the prices of basic foodstuffs and in the charges of such service items as mobile phone and other telecommunications services. The year-on-year decrease then narrowed to 2.9 per cent in the fourth quarter of 2002. Yet this was mostly attributable to a low base of comparison a year earlier, caused by a waiver of public housing rentals in December 2001.

Analysed by sub-index, the CPI(A), CPI(B) and CPI(C) all came down, by 3.2 per cent, 3.1 per cent and 2.8 per cent respectively for 2002 as a whole, larger than the decreases of 1.7 per cent, 1.6 per cent and 1.5 per cent in 2001. For the CPI(A) and CPI(B), the respective year-on-year declines likewise accelerated, from 2.8 per cent and 2.7 per cent in the first quarter of 2002 to 3.6 per cent and 3.1 per cent in the second quarter and further to 4.1 per cent and 3.4 per cent in the third quarter, before moderating to 2.4 per cent and 3.2 per cent in the fourth quarter. As to the CPI(C), the year-on-year decrease, having enlarged from 2.5 per cent in the first quarter of 2002 to 2.9 per cent and 2.8 per cent respectively in the second and third quarters, showed a further widening to 3.0 per cent in the fourth quarter. This was due to the fact that the CPI(C) was unaffected by the waiver of public housing rentals in December 2001.