Confidence levels are expected to remain high during 1997. Home prices continue to rise, particularly in the luxury market, where supply is very limited. A slight increase in interest rates is unlikely to hurt market sentiment. Mortgage rates are not expected to rise significantly and banks are aggressively competing for home-financing business. Consumer spending is spreading outside the property market as well.
Retail sales continue to rebound mostly in consumer durable goods.
A healthy economy and growth in wages has boosted consumer spending. Financial Secretary Donald Tsang has projected Hong Kong's GDP growth at 5.5 per cent in 1997 compared with 4.7 per cent last year. Inflation in 1996 was 6.7 per cent and is expected to rise to 7 per cent this year. Retailers overall expressed confidence for the coming quarter. Recovery in consumables is expected due to the upcoming hand-over to China on July 1.