Gross income
Median gross household income surpassed its previous peak in 2007, reaching €47,700 in 2018, an increase of 18.5%.
The Central Bank today published its Research Technical Paper (RTP) by David Horan, Reamonn Lydon and Tara McIndoe-Calder, presenting the survey results and assessing the distribution of wealth, incomes and spending.
The authors say these metrics are key to understanding the differential impacts of economic shocks and recoveries across households.
While the survey was carried out prior to the outbreak of COVID-19, and represents changes in household wealth and wealth inequality between 2013 and 2018 only, the HFCS data provides insight into issues relevant to the assessment of the economic impact of the pandemic on Irish households in 2020, the Central Bank says.
Improved position
The data shows an improved financial position and household resilience by comparison to the lead-up to the 2008 financial crisis.
Household net wealth grew by over €76,000 (74%) for the median household to €179,200 between 2013 and 2018.
Net wealth growth was driven in the main by house price developments and households paying down mortgage debt.
Inequality fell between 2012 and 2018, indicating that by the end of the period covered by the RTP there was a more equal distribution of wealth.
Driver
A key driver of this was the decline in negative equity, which fell from 33% of mortgaged households in 2013, to 4% in 2018.
The RTP also shows the proportion of households with some net liquid assets increased from 69.1% to 72.6%.
The median value of net liquid assets had increased from €2,000 (5.1% of annual income) to €3,000 (6.4% of income) between 2013 and 2018.
Debt-to asset and debt-to-income ratios declined during the period covered by the RTP and households’ financial buffers (liquid savings net of debt) increased.
Debt
The percentage of income used for repaying debt had also fallen since 2013, primarily due to rising incomes.
Overall, households in 2018 were less likely to say they were credit constrained compared to 2013, however one-in-eight households report having expenses greater than their income.