Majority of households forecast fall in home prices: BOK

SEJONG -- At least 1 in 2 South Koreans were found to have predicted home prices to go down in the coming year, amid a variety of tight regulations and rising interest rates, data from the Bank of Korea showed Tuesday.

According to the monthly consumer survey conducted by BOK, the index for households’ outlook on housing prices sat at 97 in February, down three points from a month earlier.

The index indicates that the number of households predicting a decline in housing prices was higher than the number of households predicting an increase. A reading below 100 means pessimists outnumber optimists, and vice versa for above 100.

This marked the first time in 21 months since May 2020 that the housing price outlook index dipped below 100. The figure for February 2022 is noteworthy given that the index reached 129 in July and August 2021, when home prices surged.

A BOK official said the index’s “decline was attributable to hikes in interest rates, continuous hawkish position of the central bank and tight regulations on mortgages.”

In a similar vein, the index for households’ outlook on interest rates reached 139, which suggests that a dominant portion of those surveyed predicted additional hikes in benchmark rates.

The growth in prices of homes, including apartments, has slowed in recent months. Nonetheless, a large portion of online commenters and some researchers are still forecasting a gradual growth in Seoul housing prices, following the current standstill.

The average trading price of homes in Seoul climbed by 13.9 percent in just a year to 40.09 million won ($33,500) per 3.3 square meters as of Friday, from 35.17 million won on Feb. 19, 2021, according to Naver.com and KB Kookmin Bank.

The price in February was also higher than 39.83 million won recorded on Dec. 3, 2021 and 38.87 million won on Sept. 17.

Among the 25 districts in the capital, Seoul’s pricey Gangnam-gu saw its average trading price rise from 61.97 million won to 70.68 million over the corresponding year.

Meanwhile, the composite consumer sentiment index, calculated by the BOK, also fell to 103.1 in February, lower by 1.3 points from a month earlier.

Though the index indicates that optimists still outnumbered pessimists, the on-month fall means that more consumers have become skeptical about future economic conditions in the wake of the omicron variant of COVID-19 and a spike in consumer prices.

The index for consumers’ forecast on household income stood at 99, down 1 point from the previous month.

By Kim Yon-se (kys@heraldcorp.com)