The headline figures show that the wealth of Irish households has risen sharply over the past decade, as the economy recovers from the financial crash. But many do not consider themselves to be “wealthy” or feel they have spare assets to invest or spend.
A new report from Davy casts interesting light on this and looks at what it is that makes a household genuinely wealthy, in the sense that we understand the word. And what this means for policy. Here are the five main points about Ireland’s wealth.
1. Rising steadily: Wealth in Ireland – measured as total net household assets minus liabilities – has risen steadily over the past decade as the economy recovered from the financial crash. Total net wealth was €1,321 billion (or more than €1.3 trillion) in 2024, which is around €688,000 on average per household. (These headline figures come from ECB data and are similar, though not identical, to those published by the Central Bank of Ireland)
Irish wealth has grown at an average annual rate of 8.4 per cent over the past 10 years. This is well in advance of the euro zone average of 4.6 per cent.
As we know from the regular Central Bank releases, the family home is a key source of this wealth, and rising house prices account for not far off 60 per cent of the total rise in household net assets over the past decade.
As Davy points out, the non-housing assets of households – deposits and financial investments mainly – have also grown above the EU average, but they have not increased as fast as the size of Ireland’s economy, even when it is adjusted for the multinational distortion to the growth figures.
The brokers conclude that “the rate of feed through from the domestic economy to the financial welfare of Irish households appears less than it might have been”.
2. Not feeling it: Why are most households not “feeling it”? The report looks at a different definition of wealth, which calculates “surplus assets”. This is an estimate of what is available for investment or for “lifestyle purposes”. And so the family home is excluded, as are pension provision and some business assets on which families rely for a livelihood. This is perhaps more in tune with what we normally think of as “wealth”.
This, not surprisingly, gives a different picture. Notably, the average “wealth” per household on this definition falls to €100,000 – from €688,000 when all wealth is counted in. The majority of households are just trying to put the basics in place – housing, retirement and an emergency fund.
Around 500,000 households – the top 30 per cent- have some spare assets but by far the majority of the wealth is concentrated in the top 10 per cent, who are estimated to have average net wealth of close to €3.4 million and surplus assets of over €2.5 million. However, even here, wealth is highly concentrated – and so the averages are skewed by the presence of a small number of very wealthy individuals.
Davy estimates that there are around 75,000 wealthy households with surplus assets of over €1 million. These are what might be seen as Ireland’s wealthy set. Much of their wealth comes from business assets, though here again the really big numbers are thought to be concentrated among a relatively small number of households. The report finds, however, that the growth in business wealth in recent years has lagged that of other assets, despite a rise in the output of the domestic economy and the sectors in which most people own businesses.
It refers to “structurally low levels of capital investment in Irish-owned businesses” in recent years and a concern that a high-cost, multinationally-dominated economy is damaging their prospects.
3. Housing gains – and pains: The role of housing in Irish wealth is central – and complicated. As the report says, it is not an asset which can be “used” in a financial sense or easily liquidated. But at the same time, it can be borrowed against or left to family members, and is central to Irish lifestyles and the movement of wealth from one generation to the next.
Only the top 10 per cent have more wealth in assets other than housing. Interestingly, the share of overall net wealth owned by this elite group fell from 55 per cent in 2014 to 49 per cent in 2024. However, much of the rise in the net value of housing assets held by the least wealthy half of the population results from the rising price of the properties they own and paying down mortgage debt – some of it inflated through the Celtic Tiger years.
Worryingly, their share of the ownership of the housing stock has fallen, reflecting shortages of affordable properties to buy. Many are being priced out. This has implications for these households in the longer term, as many who do not own properties also do not have significant financial or pension assets.
The new pension auto-enrolment scheme is one policy response to this. But the lifetime impact caused by the low level of home ownership among many younger sections of the population is a significant issue.
4. Savings culture: Perhaps not surprisingly, Davy also focuses on the passive approach many households have to their longer-term finances. Irish households retain “a strong affinity” for real-world assets, particularly residential property. Many are leaving too much cash in demand deposit accounts which pay little or no interest, even refusing to put cash into term deposits which could return some interest to them. In common with many other euro zone countries – and in contrast to countries like the US and Japan – Irish households also have low levels of investment in financial assets such as funds and listed equities.
Meanwhile, people are also missing out on opportunities to get the significant tax advantages of investing more in their pensions. In some cases this is out of necessity, with younger households having little spare cash due to the cost of rental or mortgage payments.
Separately, a Central Bank study this week showed that retail investment in financial markets here was among the lowest in the euro zone, meaning households were losing out on a way to build their longer-term assets. And the Banking and Payments Federation Ireland (BPFI) made a similar point in a report it published, saying Irish people generally only saved for the short term or for an emergency fund and calling for new easy-to-understand savings and investment products.
5. The future: With the population set to rise and more people going into older – and thus generally wealthier – age groups, Davy predicts that household wealth will continue to rise, even if the rate of growth in the next 10 years, at 6 per cent, may be slower than the close to 9 per cent of the last decade.
A lot of different calculations on financial and business wealth need to be made here, but fundamentally house prices – and supply – will be central. Davy predicts house prices generally will continue to grow, albeit at a slower rate. Time will tell and no doubt there will be ups and down to navigate along the way.