ENG-2013 — Page 77

The Economy

The Property Market

The residential property market has cooled off noticeably since March. While the government's various counter-cyclical measures (the latest round introduced in February 2013) have helped manage short-term demand, expectations of the US Federal Reserve tapering asset purchases also dented market sentiment in the second half of the year. Trading activity fell significantly, and the upward momentum in flat prices decelerated noticeably.

In 2013, the total number of sale and purchase agreements for residential property received by the Land Registry dropped by 38 per cent to 50,676 (the lowest on record) and total consideration by 34 per cent to $298.9 billion. Transactions fell across all consideration ranges (Chart 14).

Chart 14

Number ('000)

50

40

39

30

20

20

10

Sale and Purchase Agreements by Broad Type of Property

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 1 2009

2012

2010

J 2011 1

Trading activities were quiet in most of 2013.

2013

As buyers turned increasingly cautious, the monthly increase in flat prices moderated noticeably from an average of 2.7 per cent in January and February to 0.2 per cent during March to December. Comparing December 2013 with December 2012, overall flat prices rose by 8 per cent, the smallest annual increase in the current property market boom started in 2009. The rise in rentals also moderated to a modest 3 per cent during 2013. Nonetheless, following the rally in the past few years, overall flat prices and rentals in December 2013 still surpassed the 1997 peak by 42 per cent and 12 per cent respectively (Chart 15).

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