Household wealth forecast to double over next decade

However, the Wealth in Ireland report by Davy warns that wealth gains are heavily reliant on housing appreciation

The report by Davy found that between 2014 and 2024, Irish household wealth increased from €573bn to €1.32 trillion (tn) and is projected to reach €2.6tn by 2035.

Irish household wealth is projected to double over the next decade driven by rising house prices, a steady increase in wages, and a larger proportion of money going into saving vehicles such as pensions, according to the latest Wealth in Ireland report by Davy.

The report noted that between 2014 and 2024, Irish household wealth increased from €573bn to €1.32 trillion and is projected to reach €2.6tn by 2035.

The increase over the next 10 years is predicated on a number of factors including population growth, house prices increasing but the rate moderating over the coming years, wage growth of about 2.5% per year, as well as a higher level of savings through pensions and the new auto-enrolment system.

Davy is forecasting compound growth in net wealth of Irish households of around 6% a year out to the end of 2035.

“Housing is set to out-perform the other asset classes in aggregate, albeit with the rate of growth slower than for the last decade,” the report said.

“An increase in the supply of housing stock will be countered by a slower rate of growth in pricing, as demand and supply come closer together.” 

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Reflecting structural changes in the population, the share of wealth held by older people will grow fastest, “potentially impacting dispersion”.

However, the report pointed out that much of the household wealth increase since 2014 has been driven by increasing house prices with the rate of accumulation of non-housing wealth lagging behind the performance of our domestic economy.

Chief economist at Davy, Kevin Timoney, said housing has “done a lot of the heavy lifting” when it comes to this increase in wealth and “while that has helped lower-wealth households through debt paydown and equity gains” it leaves Ireland “more exposed to a single asset class” and doesn’t automatically translate into retirement income or liquid buffers.

“If more households can move from passive saving to structured wealth-building, the next decade can deliver not just higher aggregate wealth, but more balanced and resilient financial outcomes across Irish society,” Mr Timoney said.

Davy said people are not exploiting the opportunity offered by pensions for tax-efficient investing in order to grow their wealth, with private sector workers carrying an estimated pension deficit of €250bn in 2024.

"Our market research speaks to a cultural bias to wealth protection, as well as a nervousness around putting financial resources too far beyond immediate reach,” the report said.

Concentration of wealth

Wealth is concentrated with the top 10% owning close to half of the national net wealth in 2024 compared with 57% for the eurozone in aggregate. The report estimates that there are 75,000 wealthy households in Ireland, out of a total of 1.9 million, where surplus assets exceed €1m.

It found that as of 2024, the average Irish household wealth was close to €700,000 including the net value of the principal private residence (PPR) and business assets such as farmland.

This report comes as new Central Bank of Ireland data shows that, as of the end of June, total Irish household debt, through loans from domestic lenders, stands at €149bn as of the end of June this year. 

This is up significantly from the €131.2bn recorded at the end of March. This was driven by a €9.9bn increase in home loans being taken out between April and June as well as an €6.7bn increase in “other loans” being taken out.