South Koreans See Home Prices Edging Up Further, Survey Shows

South Koreans expect the housing market to keep getting hotter, according to a central bank survey that’s likely to keep policymakers wary about the risk that an interest-rate cut might amplify consumer appetite for mortgage loans.

An index measuring the one-year outlook for home prices edged up to 119 in September from 118 last month, marking a fourth straight rise, the Bank of Korea said Wednesday in its consumer confidence data. Still, it was a more moderate increase than in the two previous periods.

When it meets on Oct. 11, the board is widely expected to cut interest rates in a long-awaited pivot after authorities held the benchmark rate at a restrictive 3.5% for more than a year and a half. Consumer inflation has moderated enough that the BOK has room to transition to an easing cycle.

But the latest monthly poll gives the BOK more incentive to stick to its goal of reining in household debt and wait until the housing market cools in the greater Seoul area, where demand for middle-class homes has largely returned to levels seen during the pandemic. Financial imbalances associated with household debt are a big enough risk that authorities could choose to stand pat a little while longer.

The overall consumer sentiment index edged down by 0.8 point in September to 100, which is the threshold between optimism and pessimism. The outlook for interest-rate levels in the next six months remained unchanged at 93 after sliding in the previous three months, the BOK data showed.

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