ON AVERAGE, IRISH household wealth doubled over the last decade.

You may have spotted headlines along those lines across media outlets during the week. 

What those headlines are really saying is: ‘Irish property values have doubled over the last decade’.

There are plenty of caveats and clarifications which apply, of course. We’ll go into those shortly. 

But for anyone who was left surprised at headlines during the week, and is looking for a quick answer… well, there it is.

The headlines in question came on the back of a report from Davy Stockbrokers. It found that household wealth surged from €573 billion in 2014 to €1.32 trillion in 2024.

This came the week after the Central Bank released its own updated wealth stats. These contained similar figures, putting net Irish household wealth at a smidge under €1.3 billion.

The reaction to these reports is often one of incredulity. 

After all, they come at a time when apparently virtually the entire country is worried about a cost of living crisis. Why would that be the case if we’re all so rich?

That’s why it’s important to clarify upfront – what does ‘wealth’ mean?

It measures a person’s net assets. That is, the value of any assets you have, minus any debts you owe.

This means a household’s net wealth takes its mortgage debt into account. For example, if someone owns a house worth €300,000 and they have an outstanding mortgage of €240,000, their ‘net wealth’ is €60,000. Assuming they have zero other assets of liabilities.

Wealth, or assets, can consist of lots of things. 

It includes your pension. Any money you have saved in a bank. Any shares you own in a business, and so on.

But for the vast, vast majority of Irish people, almost all of their wealth comes from the same source – property.

It’s all about property 

Housing accounts for about two-thirds of overall Irish household wealth, according to both Davy and the Central Bank.

But this actually understates things.

Keep in mind that the richest 10% of the population owns about half of the country’s wealth.

And that group is more diversified. 

While they own lots of property, they also have plenty of other interests. For example – ‘financial assets’. This includes the likes of shares in businesses and investment funds. 

Davy estimates that the top 10% owns 80% of these types of assets. 

For everyone else, property is the main show in town.

The Central Bank found that for 80% of households, at least three-quarters of their wealth comes from housing.

This is due to a mix of reasons. A fear of losing money and a lack of knowledge were both cited as barriers to investing in a recent Central Bank survey. 

Then, there’s the fact that private investing in Ireland can be fairly complicated. While many people in other countries use ETFs (exchange traded funds) to invest in the likes of the US stock market, in Ireland, that’s complicated by some unique rules - we explored the issue in more detail here.

But to bring this back to housing – it means Irish household wealth has an incredibly strong link with the property market.

Davy points this out, plainly stating: “An increase in the value of housing stock… was the primary driver of an improved wealth dispersion in Ireland in the past decade.”

Disposable income

This has a few important consequences. The two main ones are:

• Irish people can’t / don’t readily use or invest most of their wealth
• If you don’t own a house, you likely have a very low net worth

Focusing on the first. This is important because it illustrates why households can feel the impact of the cost of living ‘crisis’.

For example – say you bought a house 10 years ago. The value of it has since doubled. However, say your wages increased below the rate of inflation. 

This would mean your disposable income – how much money you have to spend – has gone down, even if your ‘net wealth’ has gone up.

Of course, having an asset which is rising in value is a good thing, and gives a financial safety net. But a house is an ‘illiquid asset’ – it can’t be quickly converted into cash. While you can borrow against it, the most common way of realising a property’s value is to sell it, which is an all-or-nothing measure.

The Davy study tried to account for this. It calculated ‘surplus assets’. That is, how much extra cash people have – once you discount the likes of property and pensions.

The impact is clear. Average household wealth in Ireland is a significant €688,000. But average ‘surplus assets’ is only around €100,000.

And again, this is skewed by the richest – 70% of households had no ‘surplus assets’ at all.

In or out

Then there’s the other key consequence of Ireland’s property obsession – you’re either in, or you’re out.

As previously discussed, home-owners hold 97% of Ireland’s wealth. Renters have just 3%. And the gap is likely to keep growing. For example, the median net wealth for homeowners rose from €267,500 in 2018, to over €300,000 in 2020. The median net wealth for a renter was a pretty meagre €5,300 in 2020, up from €3,900 in 2018.

Davy estimates that the wealth of Irish households will double again by 2035. Much of this will likely, again, be driven by rising property values. So the gap between homeowners and renters will widen.

Particularly as buying has become increasingly difficult, and the proportion of people who own their own home is set to keep falling.

What all of that means is many Irish households have seen their wealth on paper increase significantly over the last decade.

But it’s almost all linked to property. So it’s unsurprising that plenty are still feeling the pinch with rising prices for day to day items such as food and electricity.

However, while many homeowners may be struggling with day to day spending, the studies *do* show that they at least have a major asset to fall back on – one which has rapidly increased in value.

By contrast, the extent to which homeownership dominates Irish wealth is bad news for anyone who doesn’t have a house – namely, renters in the private sector.

And this group is making up a growing section of the population, as it becomes harder and harder to buy.

Ireland is becoming a wealthier country – but for a big section of the population, that may not translate into having less financial stress in day to day life.