Worldview KEY


FACTS  Hong Kong property prices are finally falling.


guide to import and export demand – is also holding up well, though it has slowed. The other three


components of the CAP have all shown signs of weakness recently. Electricity output slowed dramatically during


2011 then steadied, though a similar decline a year before meant that growth remained healthy year-on-year. The number of passenger journeys taken


surged in December after earlier weakness. The final component is the area of floorspace


under construction. The property sector is the key domestic macro risk for 2012. The figures confirm that activity slowed abruptly at the end of 2011. Most striking though is the sudden drop in


project starts, which in the last three months of 2011 were lower than a year before. This slowdown in new starts is due in part


to the subdued level of sales and uncertainty about how long the government’s tightening measures will remain in place. But it also reflects the fact that, 2-3 years after a stimulus-funded surge in new projects, a wave of properties is now nearing completion. Given this, construction activity is likely to be weak this year, no matter what the government does.


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