Housing price posed the sole upside on the outlook for the Korean economy, according to the latest consumer sentiment survey as housing and rent prices continue upward spiral regardless of bombardment of taxes and regulations to underscore market defiance to public policy on real estate.
In the consumer sentiment index data released by the Bank of Korea (BOK) on Wednesday, the sub-index on housing price outlook jumped 13 points to 125, a rare reading above the 100 threshold in the index composites and far above the headline consumer confidence index of 84.2. It is slightly off the record high of 128 in September 2018.
The heat in the housing market contrasted with the cold sentiment about current economic conditions with a reading of 49.
A reading below 100 means more people are pessimistic about the economy than optimistic and also expect prices to be higher than lower. An outlook of 125 points shows that more people expect housing prices to soar than the opposite.
The outlook on housing prices shot up to the last high of December after hovering below 100 in April and May.
Housing prices have been soaring after stagnation following a strong set of measures on Dec. 16 as market built resilience against multiple regulations. They went even higher after the 22nd set of measures on July 10 comprised of raises in all taxes related to real estate – purchase, profit gains from sales, ownership and surcharge on multiple home owners.
By age group, the outlook was highest in respondents aged 40 and under – 129 points. The index also reached 127 points for respondents aged 70 and over.
Anticipation for housing expenses also rose to the highest since January, reading at 104 after adding 3 points from the previous month to reflect concerns about rent hikes as landlords can translate tax burden onto tenants.
The jump in apartment prices in Seoul has spilled over to smaller residential units.
According to KB Kookmin Bank on Wednesday, the median price of small-size apartments – 40 square meters and smaller – in Seoul reached 413.8 million won ($346,293) in July, the highest since the lender began compiling related data from 2016. The median price of mid-size apartments – between 40 and 62.8 square meters – also topped 700 million won for the first time in July.
A recent finding by a NGO showed median apartment prices in Seoul gained 52 percent over the last three years under Moon Jae-in government.
By Song Min-geun and Lee Eun-joo
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]