A Bank of Korea (BOK) survey found that the share of consumers who expect home prices to rise over the next year is the highest in 4 years and 3 months. The real estate market's overheating appears to have lifted expectations for apartment price gains.
According to the "Consumer survey results" released by the Bank of Korea (BOK) on the 23rd, the January home price outlook index was 124, up 2 points (p) from the previous month's 122. This index exceeds 100 when more consumers expect home prices to rise in a year.
This month's index is the highest in 4 years and 3 months since Oct. 2021 (125). Although the government rolled out the June 27 household debt measures, the Sept. 7 supply measures, and the Oct. 15 real estate measures last year in succession, it failed to curb expectations for rising home prices.
Lee Hye-yeong, head of the economic sentiment survey team at the Bank of Korea (BOK) Economic Statistics Department 1, said, "As apartment prices keep rising, more consumers appear to expect home prices to increase going forward."
Overall consumer sentiment improved. The composite consumer sentiment index (CCSI) was 110.8 in January, up 1 point from 109.8 in December. The Bank of Korea (BOK) said it improved slightly on continued recovery in the domestic economy and expectations for the government's growth strategy.
The CCSI is an index compiled from six items: ▲ current living conditions ▲ outlook for living conditions ▲ outlook for household income ▲ outlook for consumer spending ▲ current economic assessment ▲ outlook for the economy. A reading above 100 means consumer sentiment is optimistic compared with the long-term average (2003–2024), while below 100 means pessimistic.
Compared with December last year, among the six indexes, the outlook for the economy (98) rose 2p, and current living conditions (96), outlook for consumer spending (111), and current economic assessment (90) each rose 1p. The outlook for living conditions (100) and outlook for household income (103) were unchanged from the previous month.
The expected inflation rate (2.6%), which shows the outlook for consumer price inflation over the next year, was unchanged from the previous month. The expected inflation rate for prices in three years was 2.5%, down 0.1 percentage point (p) from the previous month. The expected inflation rate for prices in five years was the same as the previous month at 2.5%.
The interest rate level outlook index (104), which anticipates the level of interest rates in six months, rose 2p. As market rates rose and expectations for a base rate cut weakened, it was the highest in 1 year and 8 months since May 2024 (104).