The Bank of Korea said on the 22nd that consumer expectations that home prices will rise going forward continued for a third straight month. Despite the government's tough regulations, sales and jeonse and monthly rent prices have soared, especially in Seoul, leading more consumers to think the trend will persist. Many also expected the large performance bonuses paid by Samsung Electronics and SK hynix to flow into the real estate market.
According to the "June consumer sentiment survey results" released by the Bank of Korea that day, the June home price outlook index was 120, up 8 points from the previous month. It has risen for three consecutive months since March and is the highest level in six months since January (124). The index exceeds 100 when more consumers expect home prices to rise in a year.
Consumers cited "rent" as one of the factors that will affect inflation over the next year. The proportion of respondents was 14.3% (multiple choices), up 4.5 percentage points from the previous month (9.8%). A Bank of Korea official said that the rise in jeonse and monthly rent prices affected sentiment.
The overall consumer sentiment index was 106.6, up 0.5 points from the previous month (106.1). A reading of 100 or more is optimistic, and below 100 is pessimistic. The Bank of Korea explained that although prices are rising, stock prices of domestic corporations have climbed thanks to strong semiconductor exports. The KOSPI index on the previous day rose 0.69% from the prior trading day to 9,114.6, a record high on a closing basis. A Bank of Korea official analyzed that consumers are viewing the economy more optimistically than usual.
However, the increase in the June consumer sentiment index slowed compared with May (6.9 points), and it has not recovered to the February (112.1) level before the Middle East war. The index reflects consumer sentiment by combining six institutional sectors, including current living conditions, household income, and expenditure.
The expected inflation rate, which indicates the price level consumers anticipate for the next year, was 2.8%, the same as the previous month. Perceptions of the consumer price inflation rate over the past year were also 3%, showing no difference from the previous month.
Consumers took a benchmark rate hike as a given. The interest rate level outlook was 126, up 12 points from the previous month. This is the largest increase in 9 years and 6 months since December 2016. It is interpreted as a result of the Bank of Korea signaling rate hikes since May.