Household wealth: what is it, who has it, and why it matters

The distribution of wealth, incomes and spending is crucial to understanding the differential impacts of econmic shocks and recoveries across households. Household wealth in Ireland increased by over 76,000 euro, or 74 per cent, for the median household between 2013 and 2018. House price growth and declining mortgage debt were the primary drivers of this development. Median incomes grew by more than 18 per cent, while wealth inequality – as measured by the gini coefficient – fell over the five year period. The decline in the number of negative equity households – down from 33 to 4 per cent of mortgaged households – is one driver of the fall in inequality. Home ownership has fallen slightly from 2013, and the age at which households take out their first mortgage has risen. Despite wealth in 2018 exceeding the previous peak in 2007, most households are not using this wealth to fund spending or further housing investment, as was previously the case. We find that the household sector continues to inject housing equity at a rate of 10 per cent of disposable income, reflecting, amongst other factors, the continued repayment of mortgage debt taken out at the height of the credit boom in the mid-2000s.