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Consumer sentiment on housing prices hike hits record high
An apartment complex in Seoul. Korea Times file
By Lee Kyung-min
By Lee Kyung-min
Korean consumers showed record-high expectations of a hike in housing prices in November, indicating the failure of the dozens of government real estate policies put in place since President Moon Jae-in took office, central bank data showed Tuesday.
According to data from the Citizens' Coalition for Economic Justice (CCEJ), a left-leaning civic group, prices of apartments in Seoul climbed 58 percent over the past three years.
The Bank of Korea (BOK) data showed that the Consumer Sentiment Index (CSI) for future housing prices spiked to 130, up 8 points from the month before.
This is the highest figure the central bank has observed in its time compiling related data, which it started in January 2013. A reading above 100 means people expecting price increases outnumber those who think prices will drop. The result came from the central bank's poll of 2,366 respondents between Nov. 10 and 16, which asked participants whether they expected housing prices to jump in a year.
“Jeonse prices have been on a rapid hike over the past few months, along with housing prices on a continued rise nationwide,” a BOK official said.
“It remains to be seen whether the expectations will lead to an actual price rise in the coming months, an outcome that will largely hinge on the government policies to be rolled out.”
Unique to Korea, jeonse is a home renting system whereby tenants pay a lump sum refundable deposit in lieu of monthly rent.
Other than the strong sentiment on housing prices, the Composite Consumer Sentiment Index (CCSI) for November came to 97.9 points, inching up 6.3 points from a month earlier.
The overarching index jumped for the second consecutive month, after bottoming out in September when it stood at 79.4 points due to second wave of virus infection originated from a massive rally in Seoul. The figure for October was 91.6.
The subset of the survey showed most indices reported below-100 readings, an indication more people are worried about their finances amid the collapsing economic conditions which are showing no signs of recovery any time soon.
The CSI for current economic conditions came to 72, whereas that for future economic conditions stood at 91. The figure for current living standards was 89, and that for future living standards was a bit higher at 94. The figure for future employment prospects came to 82, up seven points from a month earlier.
Seoul National University economist Kim So-young said the data demonstrates the unhealthy state of the economy.
“People said almost all prospects involving their financial conditions will deteriorate, with expectations of a further housing price hike showing a rare, troubling strength. This is all the more concerning given the collective sentiment is driven not as part of a healthy robust economic cycle but by people fearing they will never be able to own homes due to rising housing prices.”