Net Household Assets Fell By 31% In 2008

The net financial assets of the households and non-profit institutions sector in Ireland, i.e. the excess of their financial assets (deposits, shares, life insurance and pensions fund assets etc) over their liabilities (mainly loans), fell in 2008 by €36.1bn to €81.2bn.

Over the two years 2007 and 2008 they fell by €58.7bn, a drop of 42 percent since their highest recorded end-year value of €139.9bn in 2006.

Their net financial transactions (i.e. net acquisition of financial assets less net incurrence of liabilities) were again negative in 2008, but to a much smaller degree than recently (€-1.7bn, compared to an average in 2005 to 2007 of €-13.0bn).

This reflects mainly the very large decline in net borrowing (for mortgage and other purposes), to €10.5bn, from an average of €27.0bn in 2005 to 2007; net acquisition of financial assets, at €8.9bn, was lower than the average of the three years (€13.9bn).

The main cause of the fall in 2008 in the stock of net financial assets was the large decline (€25.8bn) in the value of their financial assets, notably insurance and pension assets and shares, due to the extremely large decline in the market prices of tradable assets.

Taking into account the continuing fall during 2008 in the value of property assets, the overall net worth of households has therefore fallen very substantially in the last two years.