Consumer sentiment improves, pessimism over housing market remains in August

South Korea’s consumer sentiment rose for the fourth consecutive month in August, boosted by optimism for economic improvement, but doubts that recent measures will cool the heated real estate market remained strong, data from the Bank of Korea showed Tuesday.

The composite consumer sentiment index inched up 4 points on-month to 88.2 this month, hitting the highest since February, when the figure stood at 96.9, weighed on by the outbreak of the COVID-19.

It has been slowly improving since May, but hovering below 100 for seven consecutive months. A reading below 100 means pessimists outnumber optimists.

The central bank cited the Organization for Economic Cooperation and Development’s decision earlier this month to adjust Korea’s growth forecast to minus 0.8 percent from the previous minus 1.2 percent, sending waves of optimism across the country.

But it also cited the nation’s ability to keep the social distancing level at Level One -- the lowest of the three-tier system -- as a key catalyst, meaning the index has yet to reflect the latest risks posed by a new surge in coronavirus cases.

The poll was conducted on 2,500 households between Aug. 10 and Aug. 14, and new daily virus cases have surged to triple digits since then, with the government raising social distancing level to Level Two on Sunday. The government said at the time it will remain at Level Two for two weeks.

Despite the government’s latest efforts to curb housing prices through measures announced on Aug. 4 -- which are the 23rd of their kind – the index on housing pricing remained flat at 125 compared with the previous month. It was the second-highest figure since September 2018.

For the sub-index on housing price, a reading above 100 means that those who project housing prices will further rise eclipse those who think the market will cool down.

The Aug. 10 measures, which follow similar measures on July 10, focus on the Moon Jae-in administration’s plans to supply more than 130,000 homes in the capital area over the next eight years to quell volatility in the housing market. The National Assembly passed legislation tied to July 10 measures on the same day, which will raise property tax for multiple homeowners here.

The index on people’s assessment of current and future economic conditions both inched up five points on-month to 54 and 75 in the cited period.

By Jung Min-kyung (mkjung@heraldcorp.com)