ENG-2012 — Page 81

Chart 17

Index

400

360

320

280

240

200

160

120

80

3

The Economy

Prices and Rentals of Office Space

(1999-100)

Price index

Rental index

Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct

2008

|

2009

2010

2011

Į

2012

Prices of office space soared while rentals also registered notable gains.

The number of sale and purchase agreements for non-residential property surged by 40 per cent to 34,200, and total consideration by 39 per cent to $201.7 billion.

Reflecting the solid take-up relative to completion, vacancy rates for non-residential properties fell across the board. Specifically, the vacancy rate declined from 8 per cent to 6.9 per cent for commercial space, from 6.5 per cent to 6 per cent for office space, and from 6 per cent to 5 per cent for flatted factory space.

Price Movements

Consumer price inflation generally eased in 2012, thanks to receding external and domestic price pressures. Externally, imported inflation generally tapered over the course of 2012, thanks to global food and commodity prices peaking in early 2011 and slower inflation in Hong Kong's major trading partners. Locally, the progressive feed-through of the earlier stabilisation in fresh letting rentals in late 2011 and early 2012, the fading boost from the statutory minimum wage, and slower economic growth all helped lessen domestic cost pressures.

With price pressures on the two largest components in the household consumption basket (food prices and private housing rentals) receding, headline consumer price inflation came down to 4.1 per cent in 2012, from 5.3 per cent in 2011. Netting out the effects of the Government's relief measures, underlying consumer price inflation retreated to 4.7 per cent in 2012, from 5.3 per cent in 2011. In terms of the quarterly profile, underlying inflation eased progressively from 5.9 per cent in the first quarter to 5.1 per cent and 4 per cent respectively in the second and third quarters, and slightly further to 3.8 per cent in the fourth quarter.

The GDP deflator rose by 3.9 per cent in 2012, similar to the increase in 2011, in line with the moderate increase in domestic prices and a slight deterioration in the terms of trade (Chart 18).

53