Initiatives to increase the supply of public housing and penalise speculation in the property market by Hong Kong's government may not have been effective in suppressing flat prices, but a fall in property transactions has taken a toll on sales of furniture and electrical appliances.
Sales of furniture and fixtures fell for the third month in a row in May to HK$549 million, although the drop in value narrowed to 0.5 per cent year on year, figures released yesterday by the Census and Statistics Department show.
Sales of electrical goods and photographic equipment also continued to fall last month - in terms of both value and volume. Sales dropped 9.9 per cent to HK$2.91 billion and volume sank 2.5 per cent, although retailers said a lack of new camera models and the growing popularity of online electrical goods shops could have driven the falls.
Caroline Mak Shui-king, chairwoman of the Hong Kong Retail Management Association, said sales of furniture and electrical goods could remain slow in the second half if property sales remained sluggish.
"Performance in the two sectors is directly linked to property sales - if sales of second-hand flats remain slow you can expect little turnaround in their businesses," she said.
The number of homes sold plunged by 45 per cent from January to 5,288 last month, but prices have fallen just 2 per cent from their mid-March peak.
Mak described the domestic consumption atmosphere in the city as "quite good", although sales growth of consumer durables such as smartphones and portable computers had slowed to single-digit rates in May due to a lack of new models.
She said that retailers expected the annual summer sales campaign beginning this month to result in an 8 to 10 per cent rise in sales.
As a whole, retail sales jumped 15 per cent year on year in the first five months of the year - more than the association's forecast of between 12 and 13 per cent for the year.
But as the city's gold craze, which drove retail sales up by 21 per cent in April, has tapered off and growth in the number of mainland visitors has slowed to below 20 per cent in the first five months of the year, retailers were advised to be more prudent.
Sales of alcohol and tobacco continued to shrink after the mainland government launched a clampdown on official extravagance early this year, and sales of motor vehicles and parts plunged 23.2 per cent in May following the removal of tax incentives on more than 100 energy-efficient car models in April.
Mak said she expected sales to pick up as new models were launched over the next few months.
Jewellery and watches, which saw sales surge by 68 per cent in April thanks to a plunge in gold prices, reported a 34.5 per cent increase in sales in May. Mak said the sector was expected to have returned to average growth of between 10 and 11 per cent in June.