ENG-2004 — Page 94

64 The Economy

in 2003. With an across-the-board rise in new take-ups, vacancy rates for almost all types of property in the private sector decreased, to 6.2 per cent for residential flats, 12.7 per cent for office space, 10.8 per cent for shopping space, 8.7 per cent for conventional flatted factory space, and 11.1 per cent for industrial-cum-office space at end-2004.

Property transactions, as measured by agreements for sale and purchase of property registered with the Land Registry, leaped by 41 per cent in number and 86 per cent in value in 2004, much faster than the modest 2 per cent increase in both number and total value in 2003. While the upsurge reflected the revival of the property market over the course of 2004, it was also partly attributable to a low base of comparison for the early part of the year due to the SARS impact in 2003. Within the total, transactions of residential property soared by 41 per cent in number and 80 per cent in value in 2004, while the respective increases for non-residential property were even stronger, at 45 per cent and 109 per cent (Chart 15).

Chart 15 Sale and purchase agreements by broad type of property

Number ('000)

50

40

30

20

10

Residential property Non-residential property

0

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

1999

2000 1 2001

2002 | 2003 I 2004

Transactions in both residential and non-residential properties staged a strong rebound in 2004, with trading being particularly active in the first and fourth quarters.

Price Movements

The economy came out of a protracted period of deflation that has started since November 1998. As the pricing power of retailers returned along with the economic recovery, the rise in import prices stemming from a weak dollar and firming world commodity prices was more readily passed through to the retail price level. Prices of a wide range of consumer goods and services thus resumed increases after early 2004. Yet price pressures on the consumption front remained modest all through the second half of 2004, as wages and earnings remains subdued in overall terms, while the rebound in property rentals over the previous year had yet to show up fully. On a year-on-year basis, the declines in both the Composite Consumer Price Index (CCPI)