Irish wealth falls by 31% in one year

THE financial assets of Irish households fell by 31% last year, to €81.2 billion compared to €117.3bn the year before, according to figures from the Central Statistics Office.

The figures are based on the value of the deposits, shares, life insurance and pensions fund assets held by each household when set against liabilities, mainly made up of loans.

Much of the asset decline reflected the sharp fall in property values over the period.

The figures mean that at the end of last year average wealth per household was €179,000 per household compared to €199,000 at the end of 2007 and €209,000 at its peak in 2006, said Ronnie O’Toole, National Irish Bank economist,

Mr O’Toole blamed the fall mainly on the sharp fall-off in financial markets during 2008 but said declining property values also played a part.

The corresponding level of household debt has continued to rise and reached €128,000 in 2008 – up from €124,000 at the end of 2007.

“This combination of falling assets and rising liabilities has squeezed the net financial worth of Irish households, which has almost halved since 2006,” he said.

The average net financial worth of Irish households was €51,500 in 2008, down from €95,000 from its peak in 2006. Over the two years 2007 and 2008 it fell by €58.7bn, a drop of 42% since the highest recorded end-year value of €139.9bn in 2006.

Wealth will stabilise in 2010 as financial markets recover and savings surge and that recovery should spell the end of the fall in household wealth, Mr O’Toole said.

While house prices have continued to fall, there has been some recovery in financial assets, with three months of positive growth to the end of May.