The Seoul Metropolitan Government's reassignment of the Gangnam 3 districts as land transaction permission areas came before consumers' housing price outlook surged to its highest level in eight months. This is believed to be due to the expansion of purchasing demand following the lifting of the land transaction permission system. The expectation of lower interest rates has also risen significantly, boosting purchasing sentiment to its highest point in 1 year and 3 months.
According to the results of the 'consumer trend survey' announced by the Bank of Korea on the 25th, the housing price outlook index for March was recorded at 105, an increase of 6 points from the previous month. This indicates that more people responded that they expect housing prices to be higher in a year if this index surpasses the baseline of 100. The survey was conducted from the 11th to the 18th of this month.
The housing price outlook has risen rapidly since surpassing 100 in April of last year, recording its highest level in 2 years and 11 months at 119 in September. It then reversed to a downward trend starting in October, dropping to 99 last month, but has since risen again above the baseline this month. In terms of the magnitude of increase, it is the largest since July of last year (+7 points; 115).
The impact of the Seoul Metropolitan Government's decision to exclude the Gangnam 3 districts (Gangnam District, Seocho District, Songpa District) from the land transaction permission system on the 12th of last month was significant. Lee Hye-jeong, Head of Team of the Economic Statistics Division of the Bank of Korea, noted, "The housing price outlook is significantly affected by the real estate market," explaining that, "The lifting of the land transaction permission system led to a substantial increase in apartment sales prices in February, which influenced the housing price outlook."
However, since the Gangnam 3 districts were reassigned as land transaction permission areas on the 24th, future forecasts are expected to be adjusted downward. The Head of Team stated, "Since the land transaction permission system was reassigned from the 24th, and financial authorities have also introduced measures to manage household debt, the effects will be reflected in the housing price outlook over time," and added, "However, we must observe how much impact it will have."
Expectations for lower interest rates have also risen significantly. The interest rate level outlook index for March was recorded at 92, a decrease of 7 points from the previous month. The drop is the largest since December 2023 (-12 points; 107). When this index falls below 100, it indicates that more respondents expect interest rates to be lower in six months. According to the Bank of Korea, this is influenced by the reduction of the base rate and the reduction of additional charges by commercial banks.
However, the perceived economy has worsened further. The consumer sentiment index (CCSI), which comprehensively reflects consumer sentiment about the current economic situation, recorded 93.4, down 1.8 points from the previous month. When this index is below 100, it indicates that consumer sentiment is pessimistic compared to the long-term average. The CCSI rose in January of this year (+3 points; 91.2) and February (+4 points; 95.2), but reversed after three months.
Expectations for inflation over the next year remained at 2.7%, the same as the previous month. Although the rise in consumer prices has slowed, the increase in living expenses has expanded. Expectations for inflation three years and five years from now also remain at 2.6%, the same as the previous month.
The Head of Team stated, "Consumer sentiment seemed to recover in January and February of this year, but it has fallen again in March, meaning that overall it still has not recovered to the level before the emergency declaration in December. Concerns about the tariff policy of the United States have also increased, suggesting that consumer sentiment has been dampened."