Housing Price Increase Outlook, For Now, Has Paused

Consumer sentiment has improved for 4 months straight
but does not reflect the 2nd wave of COVID-19
Kim Yong-beom, Vice Minister, "Cannot rule out future contraction"

[Asia Economy Reporter Kim Eunbyeol] The Housing Price Outlook Consumer Sentiment Index (CSI), which had surged in recent months, has temporarily halted. Although consumer sentiment has improved for four consecutive months amid the spread of economic optimism, the impact of the second wave of COVID-19 has not been reflected, making it highly likely that the index will decline again next month.

According to the "August 2020 Consumer Sentiment Survey" released by the Bank of Korea on the 25th, this month's Housing Price Outlook CSI remained at 125, the same as the previous month. The Housing Price Outlook CSI had risen sharply over the past few months. The figure, which was 96 in April and May, surged to 112 in June and 125 in July, approaching the all-time high of 128 (September 2018). The halt in this upward trend appears to be influenced by government measures. A Bank of Korea official stated, "Due to the government's housing market stabilization measures, the nationwide apartment sale price increase has slowed, maintaining the previous month's level."

However, since the index itself remains high, the dominant analysis is that while the real estate uptrend may pause, it will not reverse. The CSI is a statistic that quantifies consumer perceptions and expectations about the economic situation through surveys. The Housing Price Outlook CSI asks whether housing prices will rise or fall over the next year and quantifies the responses. A figure above 100 means that more people expect prices to rise.

The Consumer Confidence Index (CCSI), a consumer sentiment indicator that combines current living conditions and outlook, household income expectations, and future economic assessments, rose 4.0 points from the previous month to 88.2. The consumer confidence index, which had fallen to 70.8 points in April, has been on the rise since May.

However, this survey was conducted from the 10th to the 14th and did not reflect the impact of the second wave of COVID-19 that appeared after the Liberation Day holiday. Kim Yongbeom, First Vice Minister of Strategy and Finance, stated at the macroeconomic and financial meeting that "The August CCSI results do not fully reflect the recent spread of COVID-19, and it is difficult to rule out the possibility of future contraction in consumer sentiment."

Meanwhile, in the August survey, the Current Economic Conditions CSI rose 5 points from the previous month to 54, and the Future Economic Outlook CSI also increased by 5 points to 75. The Employment Opportunity Outlook CSI rose by 7 points from the previous month to 72. Both the August inflation perception (opinions on consumer price increases over the past year) and expected inflation rate (forecast of consumer price increases over the next year) rose by 0.1 percentage points each from the previous month to 1.8%.

This content was produced with the assistance of AI translation services.