Irish household wealth hits record high of €831bn despite pandemic

The net worth of Irish households rose to an all-time high of €831 billion in the third quarter of last year, Central Bank of Ireland figures show. This amounts to €166,932 per person.

The rise in wealth came despite an increase in unemployment and an aggregate €1 billion fall in pay resulting from the pandemic.

The figures show household wealth rose by 1.7 per cent or €13.74 billion between July and September last year.

The Central Bank cautioned that the measure did not capture the wealth distribution effects across the sector, noting that “the underlying experiences of individual households may vary”.

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Household net worth is calculated by adding the total value of the housing stock and financial assets – such as cash savings, shares, pensions and possessions such as cars and antiques – and subtracting debt owed or liabilities.

It is, however, considered a crude measure of prosperity as it hides the distribution of household assets and liabilities across income groups and age categories.

The Central Bank said the rise in household wealth in the third quarter was driven by an increase in financial assets of €10.2 billion, primarily due to increasing investment in deposits and a rise in the value of insurance and pension schemes.

Housing assets also increased marginally during the quarter, while household liabilities remained stable over the quarter.

The Central Bank said the rise in wealth was in contrast to the impact of the pandemic on many households and that, in aggregate, households experienced a fall in pay of €1 billion over the quarter.

It also noted that households have also seen a €2.9 billion rise in social transfers (pandemic unemployment payment) and subsidies (temporary wage subsidy Scheme) alongside a fall in consumption of €1.3 billion.

Opportunities

“These counteracting movements lessen the impact of unemployment and the fall in pay experienced by household net worth in aggregate,” it said.

Household debt fell by €352 million over the quarter, continuing the downward trend to stand at €131 billion. Total debt now equates to €26,225 per capita.

The Central Bank data revealed that gross household savings increased by €570 million in the third quarter to stand at €6.4 billion for the period.

“The increase could be a result of the limited spending opportunities of the sector or increased precautionary savings due to the impact of the pandemic,” it said.

Separate figures published recently show Irish households stashed away €13.4 billion of savings in banks and credit unions in the 12 months to the end of November.