Richest 10% of Irish households command almost half the wealth

DCM Editorial Summary: This story has been independently rewritten and summarised for DCM readers to highlight key developments relevant to the region. Original reporting by Irish Times, click this post to read the original article.

The wealthiest 10 per cent of Irish households now command almost 50 per cent of total household wealth in the State, Central Bank figures show.

The net wealth of Irish households rose to a record €1.34 trillion in the third quarter of last year, equating to approximately €245,000 per person or €724,000 per household.

The rise in wealth, detailed in the Central Bank’s latest quarterly household wealth statistics, comes despite a cost-of-living squeeze and reflects, in the main, higher property values.

While positive, the figures highlight a very uneven distribution of wealth in the Republic with the total net wealth of households in the poorest half of the distribution accounting for just 8.9 per cent (€128 billion) of total household wealth.

The richest 10 per cent of households held more than five times that amount, which equated to 49.2 per cent or €709 billion of total household wealth.

The figures showed that the total net wealth of Irish households rose by €48.3 billion to stand at €1.337 trillion at the end of the third quarter of last year.

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“This represents a new series high, continuing the pattern of growth seen in recent years,” it said.

The increase was driven by a rise in housing wealth, a function of rising housing prices, which increased by €31.1 billion to €905 billion.

House prices rose by 7 per cent last year and by 8.7 per cent the previous year.

Housing wealth now accounts for almost 68 per cent of total net wealth and 60.6 per cent of the total assets of Irish households.

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Household net worth is calculated by adding the total value of the housing stock and financial assets – such as cash savings, shares, pensions and possessions such as cars and antiques – and subtracting debt owed or liabilities.

It is considered a crude measure of prosperity as it hides the distribution of household assets and liabilities across income groups and age categories.

“Ireland’s total household wealth has hit €1.34 trillion, but most of it is concentrated at the top,” Keith Butler, chief executive of Galway-based financial services group Ask Acorn, said.

“Most families have modest savings, if any at all, and it’s just sitting on deposit,” he said.

The Central Bank figures indicated households’ financial assets stood at €589 billion at the end of the third quarter and were mainly composed of currency and deposits (€218.6 billion) and insurance and pension entitlements (€272 billion).

Total liabilities, mainly consisting of long-term loans, totalled €157.1 billion, an increase of €1.1 billion on the previous quarter.