PORSCHE and helicopter sales have plunged as the wealth of every Irish household dropped by more than €150,000 over the past two years.
Figures released by National Irish Bank (NIB) show that at the end of last year, average Irish household wealth was €539,000, compared to €646,000 at the end of 2007 and €693,000 at the peak of the housing market in 2006.
The 20%, or €150 billion, drop in wealth has resulted in 90% less being spent on Porsche cars, 80% less on Lexus vehicles and a sharp reduction in donations to charities. Also, for every 20 Land Rovers sold in January last year, one was sold this year.
The findings show the number of helicopters imported last year fell from 66 in 2006 to two, while spending on foreign holidays plummeted.
Consumers are now saving 10% of their disposable income compared with 3% in 2007. As a result, they are switching to cheaper grocery products.
NIB said recession-proof products like milk, tea, bread, toothbrushes and deodorants were selling well but shoppers were turning in greater numbers to “own-brand” goods that are, on average, a third cheaper than branded products. Four out of five shoppers said they now buy private label goods.
Head of wealth management at NIB, Garvan Callan, said: “Irish households are managing their wealth through unprecedented times and are reacting by rapidly increasing their rate of saving.
“Interest rates are at their lowest for 300 years and are likely to remain relatively low for a protracted period. For many households, higher savings reflect greater uncertainty and these households should maintain savings in a liquid, secure manner.”
The findings reveal Irish people switched around €10bn out of current accounts to term deposit accounts last year, which NIB said indicates people do not need as much money for spending and are focusing on building up long-term savings.
The NIB report points out that by the time the housing market bottoms out next year, the loss in wealth from its 2006 peak is likely to be significantly higher.
A combination of falling assets and rising liabilities meant household debt was €133,000 at the end of 2008, up from €128,000 at the end of 2007.
Excluding owner-occupied housing, average household wealth was €252,000 at the end of 2008, compared to €308,000 at the end of 2007.
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