THE CENTRAL BANK says that Irish households have lost a significant proportion of net worth compared with other European countries in recent years due to the “substantial decline” in house prices.
Between 2007 and the end of 2010, Irish households saw a net wealth drop of 23 per cent when measured as a proportion of disposable income.
The figures show that, by the end of 2010, the net wealth of Irish households stood slightly below the European average at 6.5 times their disposable income.
In the period studied, household property wealth in Ireland declined by 28 per cent, but the worth of Irish households’ financial assets rose by 5 per cent.
A household’s net wealth within an economy is calculated by adding the value of property assets and financial assets and subtracting total debts.
After Ireland, Denmark was the country to experience the greatest fall in household wealth (-17 per cent), followed by Spain (-13 per cent). Denmark also saw a dip in household property wealth of 18 per cent.
In contrast, some countries saw an increase in net wealth, with Austria experiencing a surge of 7 per cent, and a rise in household property wealth of 8 per cent.
The central Bank’s latest Quarterly Bulletin revealed that Irish households have increased savings rates in recent years to reduce high debt levels – and that they have decreased their debt levels more than any other country since 2008. However, Irish households’ debts were still three times their disposable income at the end of 2010.
Meanwhile, Belgium was the country with the least indebted households, with average debts of 80 per cent of a household’s disposable income.
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