Consumer expectations for rising home prices have reached their highest level in nearly four years and ten months.
According to the Bank of Korea's 'Consumer Trend Survey' released on July 27, the Home Price Consumer Sentiment Index (CSI) rose by 7 points to 127 in July, marking the highest level since September 2021 (128). This increase is attributed to ongoing rises in apartment sales and rental prices, particularly in Seoul and the surrounding Gyeonggi Province.
Lee Heung-hoo, head of the Bank of Korea's Economic Sentiment Survey Team, stated, "The recent upward trend in housing prices appears to be influencing consumer expectations. However, the effects of rising loan interest rates and reduced lending limits from commercial banks should be monitored over time."
The Consumer Sentiment Index (CCSI) improved for the third consecutive month, rising by 0.2 points to 106.8. Despite concerns over inflation and falling stock prices, strong exports and investments in the semiconductor sector, along with expectations for wage increases, contributed to this improvement.
The CCSI is calculated using six indices: current living conditions, future living conditions, household income expectations, consumption expenditure expectations, current economic conditions, and future economic outlook. A score above 100 indicates optimistic consumer sentiment compared to the long-term average (2003-2025), while a score below 100 indicates pessimism.
Among the six indices, the current living conditions outlook CSI fell by 1 point to 93 due to persistent high inflation and declining stock prices. Meanwhile, the future living conditions index rose by 1 point to 98, and the household income expectations index increased by 1 point to 101. The consumption expenditure expectations index remained unchanged at 110.
The wage level outlook remained steady at 124, the same as the previous month, but this reflects growing expectations for future wage increases compared to the long-term average (116) and the historical high (126).
The current economic conditions index, which reflects perceptions of the economic situation, fell by 2 points to 84, while the future economic outlook index remained unchanged at 92. Concerns about the economic situation have increased due to renewed tensions from the Middle East conflict, but positive forecasts for economic growth from major institutions, driven by strong semiconductor performance, have kept the index stable.
Among inflation expectations, the projected consumer price increase rate for the next year is 2.7%, down by 0.1 percentage points as domestic oil prices have decreased and the depreciation of the won has eased.
* This article has been translated by AI.
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