Expectations for Housing Prices Remain High, Customers shopping at a large supermarket in Seoul. News1, ‘With a significant increase in economic growth rate in the third quarter, consumer economic sentiment has reached its highest level in eight years. The conclusion of the Korea-US tariff negotiations also contributed to this improvement in sentiment. Expectations for rising housing prices remain high.’,
According to the “Consumer Sentiment Survey” released by the Bank of Korea on the 25th, the Consumer Confidence Index (CCSI) in November stood at 112.4, up 2.6 points from October. The index had fallen for two consecutive months in September (-1.3 points) and October (-0.3 points) before turning upward after three months. The absolute figure was the highest since November 2017 (113.9).
‘The CCSI is a composite index derived from six indicators: current living conditions, living condition prospects, household income prospects, consumption expenditure outlook, judgment on the current economy, and future economic outlook. A reading above 100 indicates optimistic consumer sentiment compared to the long-term average (2003-2024), while a reading below 100 indicates pessimism.’
In November, among the six components of the CCSI, the future economic outlook rose by 8 points to 102. The judgment on the current economy increased by 5 points to 96. Household income prospects (104) went up by 2 points, and living condition prospects (101) rose by 1 point. There was no change in current living conditions (96) and consumption expenditure outlook (101).
Lee Hye-young, the head of the Bank of Korea’s Economic Sentiment Survey team, analyzed, “The consumer sentiment index rose due to factors such as the resolution of the Korea-US tariff negotiations and the economic growth rate in the third quarter surpassing the projections.” The growth rate in the third quarter was 1.2%, higher than the Bank of Korea’s initial forecast of 1.1%. Lee added, “The consumer sentiment index had dropped significantly following the state of emergency situation, and as uncertainties like the US tariffs began to resolve, we saw a notable rebound due to the base effect.”
The housing price outlook index in November was 119, down 3 points from October. This index had risen significantly from 112 in September to 122 in October before declining again, yet it remains higher than it was immediately after the 6/27 measures in July (109).
The interest rate outlook index, which predicts the level of interest rates in six months, rose from 95 in October to 98 in November. The expected inflation rate for the consumer prices over the next year was 2.6%, the same as the previous month.