"Home prices really might fall"... First time in 13 months that expectations for a drop are building

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According to The Financial News, amid the government’s strong push to rein in housing prices, expectations for a decline in home prices have, for the first time in 13 months, overtaken expectations for further increases.
The Bank of Korea (BOK) announced on the 25th, in its March Consumer Sentiment Survey, that the Housing Price Outlook Consumer Sentiment Index (CSI) came in at 96, down 12 points from 108 a month earlier.
This is the first time in 13 months, since February 2025, that the index has fallen below 100. An index reading under 100 generally means that expectations for a fall in home prices outweigh expectations for a rise. The scheduled end of the temporary easing of heavy capital gains tax on multiple-home owners, higher lending rates, and expectations of increased properties coming onto the market all played a role.
Lee Heung-hoo, head of the economic sentiment survey team at BOK, said, "Housing prices in key areas of Seoul are on a downward trend, but if you look at the country as a whole, they are still rising, so we need to watch whether the government’s real estate measures will lead to a sustained stabilization of the housing market."
Following the Iran War, international oil prices have surged, heightening concerns about inflation and an economic slowdown. As a result, this month’s Composite Consumer Sentiment Index (CCSI) was 107, down 5.1 points from the previous month. It is the largest drop since December 2024, when it fell by 12.7 points.
Lee added, "For now, the index is still above the long-term average of 100, but how much supply chain disruptions worsen if the war drags on will have a significant impact on how consumers perceive the economy. We also need to keep an eye on the semiconductor cycle and U.S. tariff policy."
In the same vein, the Consumer Sentiment Index for Future Economic Conditions stood at 89, down 13 points from 102 a month earlier. The expected inflation rate, which reflects consumers’ expectations for the consumer price inflation rate over the next year, rose 0.1 percentage point to 2.7% from 2.6%. This is the first increase in five months, since October last year.
Meanwhile, as fewer people expect the economy to improve, views on household finances have also turned more negative. The Current Living Conditions CSI (Current Living Conditions Consumer Sentiment Index) fell to 94, down 2 points from 96 the previous month, and the Consumer Sentiment Index for Future Living Conditions dropped 4 points to 97. The Current Household Savings Consumer Sentiment Index (CSI) declined 3 points to 97, while the Household Saving Prospects Composite Sentiment Index (CSI) fell 2 points to 100.
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moon@fnnews.com Moon Young-jin Reporter