ENG-2012 — Page 79

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The Economy

purchase agreements for residential property received by the Land Registry in 2012, 4 per cent lower than in 2011, but total consideration edged up by 2 per cent to $452.3 billion due to rising property prices (Chart 15).

Chart 15

Sale and Purchase Agreements by Broad Type of Property

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59

40

30

20

10

0

Number ('000)

Non-residential property Residential property

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

2008 I 2009

2010

2011

2012

Overall trading in the property market gathered momentum over the course of the year before plunging in November and December.

As a result of the faster increase in flat prices than in income, the home purchase affordability (i.e. the ratio of mortgage payment for a 45-square metre flat to median income of households, excluding those living in public housing) rose to 52 per cent in the fourth quarter, surpassing the long-term average of 49 per cent over 1992-2011.

Raising flat supply through increasing land supply is the Government's top policy priority in ensuring a healthy and stable development of the property market. To step up efforts in this direction, in August and September the Government introduced a series of measures to increase land and flat supply, such as changing the use of various sites to residential use.

Before the supply side measures can fully redress the tight demand-supply balance of flats, the Government also puts strong emphasis on managing demand and reducing the possible risks to financial stability arising from an exuberant property market. In September, the Hong Kong Monetary Authority introduced the fifth round of macro-prudential measures to strengthen the risk management of the banking sector's mortgage lending business. In October, the Government announced an enhancement of the Special Stamp Duty to further curb speculative activities and the introduction of a Buyer's Stamp Duty to give priority to the housing needs of Hong Kong permanent residents. The Government has also made efforts to improve transparency of the residential property market, with the Residential Properties (First- hand Sales) Ordinance enacted in July 2012.

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