Family fortunes fall €43,000 in two years...
THE average family has lost €43,000 in the value of its pensions, shares, bank deposits and other assets in just two years, shocking new official figures reveal.
At the height of the boom, in 2006, the average household had financial assets worth €95,200, but this has now nearly halved to just €51,500 today.
The huge fall is highlighted in figures from the Central Statistics Office (CSO). It comes as workers have been hit hard by the introduction of savage income levies and pay cuts.
The scale of the destruction of household assets is unprecedented in the history of the State. The losses arise from a sharp fall in the value of pensions, insurance policies, shares and bank deposits, according to the CSO.
Stock market collapses over the past year have meant that almost all those with private pensions are now nursing huge losses.
The only good news has come from a fall in prices – particularly mortgage costs. Collectively, the 1.5 million households in the State have had €36.1bn wiped off the value of their financial assets in the last year alone.
However, the loss of value in pensions, investments and deposits over the last two years has been a much more severe €58.7bn.
Households in this country now hold financial assets worth €81.2bn, down from €117.3bn in 2007.
Despite the sharp fall in the value of assets, the recession has resulted in household debt continuing to rise.
Households now have a debt mountain of €128,000 on average, up from €124,000 in 2007. The debt of households is mainly made up of mortgages, but also includes credit card balances and personal and car loans.
National Irish Bank economist Ronnie O’Toole said falling asset prices and rising debt levels were combining to squeeze the net worth of households.
“The average net financial worth of Irish households was €51,500 in 2008, down from €95,000 from its peak in 2006,” he said.
Dr O’Toole sounded a warning about the CSO figures which, he said, only related to financial assets and ignored some important elements of personal wealth including housing, farmland and businesses.
This meant the CSO figures may actually underestimate the scale of the destruction of wealth.
A recent study carried out by the National Irish Bank economist found that the net wealth of the average Irish household has declined by €153,000 over the last two years, equivalent to a fall of more than 20pc.
This figure is based on the value of household assets, which include pensions, shares and deposits, less outstanding debt, which includes mortgages and personal loans.
However, Dr O’Toole said this year could signal the end for the sharp fall in household wealth seen in the last two years.
House prices are likely to continue to fall, but the value of financial assets is rising, with stock markets having risen for three months in a row now.
“Pension funds, for example, have risen 14pc since the beginning of March, giving a gain for the year to date of over 5pc,” Dr O’Toole said.
Households have responded to the downturn by greatly increasing their savings rate over the past year, reflected in lower borrowing, retail sales and plummeting imports.
Consumers are now building up nest eggs equivalent to around 12pc of their income, up from 3pc in 2007.
Report - Irish Independent
THE average family has lost €43,000 in the value of its pensions, shares, bank deposits and other assets in just two years, shocking new official figures reveal.
At the height of the boom, in 2006, the average household had financial assets worth €95,200, but this has now nearly halved to just €51,500 today.
The huge fall is highlighted in figures from the Central Statistics Office (CSO). It comes as workers have been hit hard by the introduction of savage income levies and pay cuts.
The scale of the destruction of household assets is unprecedented in the history of the State. The losses arise from a sharp fall in the value of pensions, insurance policies, shares and bank deposits, according to the CSO.
Stock market collapses over the past year have meant that almost all those with private pensions are now nursing huge losses.
The only good news has come from a fall in prices – particularly mortgage costs. Collectively, the 1.5 million households in the State have had €36.1bn wiped off the value of their financial assets in the last year alone.
However, the loss of value in pensions, investments and deposits over the last two years has been a much more severe €58.7bn.
Households in this country now hold financial assets worth €81.2bn, down from €117.3bn in 2007.
Despite the sharp fall in the value of assets, the recession has resulted in household debt continuing to rise.
Households now have a debt mountain of €128,000 on average, up from €124,000 in 2007. The debt of households is mainly made up of mortgages, but also includes credit card balances and personal and car loans.
National Irish Bank economist Ronnie O’Toole said falling asset prices and rising debt levels were combining to squeeze the net worth of households.
“The average net financial worth of Irish households was €51,500 in 2008, down from €95,000 from its peak in 2006,” he said.
Dr O’Toole sounded a warning about the CSO figures which, he said, only related to financial assets and ignored some important elements of personal wealth including housing, farmland and businesses.
This meant the CSO figures may actually underestimate the scale of the destruction of wealth.
A recent study carried out by the National Irish Bank economist found that the net wealth of the average Irish household has declined by €153,000 over the last two years, equivalent to a fall of more than 20pc.
This figure is based on the value of household assets, which include pensions, shares and deposits, less outstanding debt, which includes mortgages and personal loans.
However, Dr O’Toole said this year could signal the end for the sharp fall in household wealth seen in the last two years.
House prices are likely to continue to fall, but the value of financial assets is rising, with stock markets having risen for three months in a row now.
“Pension funds, for example, have risen 14pc since the beginning of March, giving a gain for the year to date of over 5pc,” Dr O’Toole said.
Households have responded to the downturn by greatly increasing their savings rate over the past year, reflected in lower borrowing, retail sales and plummeting imports.
Consumers are now building up nest eggs equivalent to around 12pc of their income, up from 3pc in 2007.
Report - Irish Independent