The value of housing assets is now greater than at the Celtic Tiger peak
Household net wealth in the country has officially topped €1trn for the first time as a boom in house values pushed the figure over the landmark level.
New data published by the Central Bank yesterday showed that big increases in property revaluations, along with growing cash savings, boosted personal wealth to just over €1trn in the first quarter, up from €995bn at the end of 2021.
Most of that total – €649bn – consisted of housing assets, which accounted for €630bn at the start of the year.
The aggregate value of housing assets is now far above the previous record high of €604bn recorded in 2007, in the last days of the Celtic Tiger property boom.
The rise in net wealth during the first three months of the year was driven by a combination of growth in financial assets (€3.5bn) and housing assets (€19.6bn), according to the Central Bank.
These were offset by a €3.5bn increase in financial liabilities, leading to a lower overall increase in net wealth compared with the previous quarter.
Nonetheless, upward revaluations in household financial assets and investment in financial assets have been an important contributor to rising net wealth over the last year.
Since the first quarter of 2021, household financial assets have grown by €32bn to an all-time high of €532bn at the end of March.
A big part of the story is also the continued decline in household debt levels, which have been more than cut in half relative to disposable income since the eve of the financial crisis.
Irish households, once among the most overleveraged in the world, are now at about the eurozone average for debt levels.
Record cash savings during the pandemic only increased net wealth as debt became a smaller portion of household balance sheets.
However, the Central Bank pointed out that its data says nothing about wealth distribution and does not capture the experiences of households at the individual level – a nod to the challenging circumstances for many on low incomes who are facing much higher energy, food and housing costs.
While the pandemic boosted the savings of many professionals who were able to work from home for the last two years, workers in the worst affected sectors such as hospitality suffered from job cuts and loss of income.