Consumer Sentiment Shrinks Again Amid COVID-19 Third Wave... Housing Price Outlook Hits Another 'Record High'

Bank of Korea 'December 2020 Consumer Sentiment Survey'

[Asia Economy Reporter Kim Eun-byeol] The Consumer Confidence Index (CCSI) contracted again after three months amid the third wave of the novel coronavirus infection (COVID-19). Meanwhile, the housing price outlook once again set a new all-time high.

According to the "December 2020 Consumer Sentiment Survey" released by the Bank of Korea on the 29th, this month's CCSI was 89.8, down 8.1 points from the previous month. This marks a decline for the first time in three months after falling 8.8 points to 79.4 in September due to the second wave of COVID-19.

The CCSI uses the long-term average from 2003 to 2019 as a baseline value of 100; a value above 100 indicates optimism compared to the long-term average, while below 100 indicates pessimism. Hwang Hee-jin, head of the Bank of Korea's Statistics and Survey Team, explained, "The rise in social distancing measures due to the third wave of COVID-19 in Korea has worsened perceptions of the economy and household financial conditions, leading to a decline compared to the previous month."

However, this month's decline in CCSI was smaller than the 8.8-point drop in September during the second wave of COVID-19. The CCSI itself was also at a higher level compared to September. Team leader Hwang said, "Although the situation is not very good, with discussions about raising social distancing to level 3 due to the current COVID-19 spread, consumers seem to have somewhat adapted to the prolonged pandemic, which also had an impact." Although the CCSI fell due to the third wave of COVID-19, a combination of factors such as expectations for vaccines contributed to a smaller decline than before.

Meanwhile, the Housing Price Outlook Consumer Sentiment Index (CSI), which surveys expectations for housing prices one year ahead, rose 2 points from the previous month, setting a new all-time high once again. The housing price outlook CSI recorded 132, up 2 points, as the nationwide apartment sale prices continued to rise. The Bank of Korea has been surveying the housing price outlook CSI since January 2013.

The housing price outlook CSI recorded 125 in July and August, then fell to 117 in September due to real estate policies and other factors. However, it rebounded to 122 in October, jumped 8 points to 130 in November, and rose further this month. This indicates a renewed spread of expectations for rising housing prices.

This month's Employment Opportunity Outlook CSI (74) fell by 8 points as economic activity contracted. The Current Economic Conditions CSI (56), which compares the situation to six months ago, dropped by 16 points, and the Future Economic Outlook CSI (81), which surveys the outlook for six months ahead, also fell by 10 points. Both inflation perception and expected inflation rate remained steady at 1.8% compared to the previous month.

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