Household wealth

Mon, Feb 3, 2014, 13:23

Irish households are restoring their net wealth at the fastest rate in eight years, while the level of household debt continues to fall. That is the encouraging news revealed by Central Bank data for the third quarter of 2013. And while both these developments represent welcome progress, neither the wealth increase nor the debt reduction is occurring as fast as might have been anticipated. A huge gap still remains to be closed before the net worth of households returns to the peak level recorded in 2007.

Household wealth at €490 billion, or €107,000 per head of the population, is a third lower than seven years ago. Likewise, household debt – at €168 billion – is a sixth lower than its boom time peak. And when measured as a proportion of disposable income (196 per cent) Ireland’s personal debt ratio remains among the highest in Europe.

The Central Bank has just raised marginally its growth forecast for 2014, encouraged by evidence of increases in full-time employment in recent months. It has also forecast a further fall in the Live Register rate of unemployment, to 11.9 per cent this year, down from 13.2 per cent in 2013. Stronger economic growth, as it points out in its recent quarterly report, is likely to support household incomes and provide a boost to consumer spending.

Such increased economic activity should provide a further boost to the net worth of households, and facilitate a further reduction in household debt. And, in addition, the national rise in property prices in recent months should both help to raise net household wealth, while easing the burden of those with mortgage debt, as negative equity is reduced. Central Bank data indicate that last November, 17 per cent (116,481) of mortgage holders were then in arrears – a figure that may well have reached its peak. However, such a high level of loan default also indicates the scale of the challenge that still faces the banks and those in arrears on their repayments: one that remains to be properly addressed and finally resolved.

Sign In

Forgot Password?

Sign Up

The name that will appear beside your comments.

Have an account? Sign In

Forgot Password?

Please enter your email address so we can send you a link to reset your password.

Sign In or Sign Up

Thank you

You should receive instructions for resetting your password. When you have reset your password, you can Sign In.

Hello, .

Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.

Thank you for registering. Please check your email to verify your account.

We reserve the right to remove any content at any time from this Community, including without limitation if it violates the Community Standards. We ask that you report content that you in good faith believe violates the above rules by clicking the Flag link next to the offending comment or by filling out this form. New comments are only accepted for 3 days from the date of publication.