The Bank of Korea's Composite Consumer Sentiment Index (CCSI) edged up to 106.8 in July from 106.6 in June, extending gains for a third straight month after plunging to 99.2 in April following the Middle East conflict.
A reading above 100 indicates optimism exceeding the long-term average.
The survey adds to signs that domestic confidence is improving alongside South Korea's AI-driven export boom.
Preliminary data released last week showed the economy expanded 0.6 percent quarter on quarter in the second quarter, bringing first-half growth to 2.4 percent as record semiconductor exports and resilient private consumption offset lingering weakness in construction.
Consumers also benefited from one of Asia's strongest equity rallies this year, with the benchmark KOSPI surging about 60 percent year to date, boosting household wealth even as the Bank of Korea resumed monetary tightening with a 25-basis-point interest rate hike in July to contain inflationary pressures and asset prices.
The July survey showed households grew more optimistic about future income, with the household income outlook index rising one point to 101, while expectations for living standards also improved. Consumer spending plans remained unchanged at 110, suggesting resilient domestic demand despite elevated borrowing costs.
Current living conditions, however, slipped one point to 93, reflecting the continued burden of elevated consumer prices and tighter financial conditions. Respondents' assessment of current economic conditions also eased to 84 from 86, although the outlook for the economy six months ahead held steady at 92, supported by stronger growth prospects tied to the semiconductor industry.
The housing price outlook index jumped seven points to 127, the highest reading since September 2021, extending a four-month surge as apartment prices continued climbing across Seoul and neighboring Gyeonggi Province. The index has rebounded sharply from 96 in March, indicating a growing majority of consumers now expect home prices to rise over the coming year.
According to KB Real Estate, Seoul apartment prices rose 1.05 percent in July, marking a second consecutive month of gains, while prices in Gyeonggi Province accelerated 0.87 percent, led by the Dongtan district of Hwaseong, where apartment values jumped 6.25 percent, the strongest increase nationwide. The area mostly houses employees of chip facilities of Samsung Electronics enjoying red-hot earnings streak and compensations.
The rebound in housing sentiment came despite the central bank's tightening campaign and commercial banks' moves to curb mortgage lending, underscoring expectations that limited housing supply and persistent demand will continue supporting prices.
Reflecting renewed borrowing for home purchases, the current household debt index rose one point to 100, its highest level since April last year. Meanwhile, the interest-rate outlook index remained elevated at 126, unchanged from June after jumping sharply following the Bank of Korea's July rate increase.
Inflation expectations moderated.
Consumers' one-year inflation expectation eased to 2.7 percent from 2.8 percent, while three-year expectations fell to 2.6 percent, as lower domestic fuel prices and a firmer won helped offset concerns over recent consumer price increases.
For the time being, inflation is perceived to hover around 3 percent in line with the central bank expectations. Oil products remained the biggest perceived source of inflation, although their influence declined markedly from the previous month.
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