ENG-2007 — Page 98

58 The Economy

123 600. The rise was particularly noticeable in transactions involving properties. worth between $1 million and $2 million. The rise came in the wake of cut in stamp duties for properties in this price range. The volume of agreements for non-residential properties received in 2007 was 33 per cent larger than that of the previous year, but the total value of the deals struck for agreements received in 2007 was only 10 per cent higher than those in 2006 because the individual transactions in 2006 were much larger (Chart 15).

Chart 15

Sale and purchase agreements by broad type of property

50

40

30

20

20

10

0

Number ('000)

Residential property Non-residential property

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

2007

2003

2004

2005

2006

Under favourable economic backdrop and interest rate environment, property market activity was hectic during 2007, especially in the fourth quarter. Both transaction volume and value recorded their post-1997 highs.

Price Movements

Continuing the upward trend in 2005 and 2006, the underlying inflation pressures continued to climb up over the course of 2007, reflecting the robust domestic demand as well as stronger external cost pressures. While the headline consumer price inflation for 2007 as a whole, as indicated by the Composite Consumer Price Index (CCPI) at 2 per cent, was the same as that for 2006, the former number was lowered by the public housing rental waiver in February 2007 and the rates concession in the second and third quarters of the year. Taking away the effects of these measures, the underlying consumer price inflation for 2007 was 2.8 per cent, which was still rather moderate taking into consideration the robust economic growth for four consecutive years. Local business cost pressures were kept largely in check in 2007. Wages rose moderately during the year, and the impact on business costs was much alleviated by rising labour productivity. Likewise, the impact from the rise in commercial rentals was to a large extent diluted by rapid expansion in business volume.