Housing market sentiment hits 4-year high, raising questions over policy effectiveness

Tourists takes a photo of apartment complexes from Mount Nam in Seoul, Tuesday. Yonhap

Consumer sentiment toward home prices has reached its highest level in four years, casting doubt on the effectiveness of the government’s recent measures to cool the housing market.

In a consumer sentiment survey released Tuesday, the Bank of Korea (BOK) said the housing price outlook index for October stood at 122, the highest since October 2021, when it was 125.

A reading above 100 means that more consumers expect home prices to rise than to fall.

The BOK noted that the index rose 10 points from the previous month, marking the sharpest increase since April 2022, when it also climbed by 10 points.

The findings come despite the government’s introduction of three major housing regulations — on June 27, Sept. 7 and Oct. 15 — and about four months after President Lee Jae Myung took office.

The measures included stricter mortgage lending rules and the expansion of speculation-prone zones, particularly in Seoul and surrounding metropolitan areas where housing demand remains high.

The central bank said the survey results “do not sufficiently reflect the effects of the government’s latest policies,” noting that the data was collected from 2,500 households nationwide between Oct. 14 and 21, with 75 percent of responses submitted on Oct. 14, before the most recent policy took effect.

“Because many respondents based their answers on early market conditions, we’ll need to keep watching how the real estate market evolves,” said Lee Hye-young, head of the BOK’s economic sentiment survey team.

However, private sector experts offered a different interpretation, saying the survey highlights homebuyers’ skepticism toward what they see as policy inconsistency.

“It appears that the government tends to back off and ease regulations when public opposition intensifies,” said a real estate professor, who spoke on condition of anonymity. “Such behavior makes homebuyers believe the government is inconsistent and that home prices will keep trending upward, just as they did before President Lee took office.”

The professor pointed to the Financial Services Commission's decision to restore the loan-to-value (LTV) cap to 70 percent, reversing an earlier move to tighten it to 40 percent.

The LTV ratio determines how much a borrower can take out as a mortgage compared to the appraised value of the property — meaning a lower LTV makes it harder to obtain loans.

A real estate broker, also speaking on condition of anonymity, cited reports that the ruling Democratic Party of Korea is considering dropping plans to restrict homeowners — particularly apartment residents — from reaping large unearned profits from reconstruction projects that sharply raise property values.

“Policy flip-flopping is likely to become more frequent as the June 2026 local elections approach,” the broker said. “You don’t want to lose votes in Seoul and the greater capital area, which are crucial for consolidating the Lee administration’s political power.”