According to a study, people in Germany have accumulated record wealth on average in recent years. “Especially in households with little wealth, there was strong growth relative to the existing stocks,” says the current monthly report of the Deutsche Bundesbank. “The inequality in terms of net wealth has therefore reduced slightly between 2017 and 2021.” In a European comparison, however, wealth remains unequally distributed.
Less debt, private households had record assets (net) of 316,500 euros on average in 2021, according to the Bundesbank study “Private households and their finances”. That was 83,600 euros more than in the evaluation four years earlier, since 2010/11 a good 121,300 euros have been added. 4119 representative households were surveyed.
Wealth increase due to saving zeal during pandemic
According to the central bank, the enthusiasm to save due to the limited consumption options in the corona pandemic also contributed to the increase in assets. The assets of poorer households in particular consist primarily of balances in savings accounts and other low-risk forms of investment. In the case of large fortunes, real estate and company ownership are particularly noticeable.
Because the average values ??are strongly influenced by extreme values, the Bundesbank experts consider the so-called median value to be more meaningful. It is in the middle when sorting the values ??by size. Households are divided into a richer and a poorer half. The value in the middle – the median – also rose significantly from 70,800 euros in 2017 to 106,600 euros in Corona year 2021. However, it is still lower than in other countries for which comparable data is available. In Italy, the median was 150,800 euros and in Spain 122,000 euros.
Wealth inequality “slightly reduced”
“Partly as a result of the additional savings accumulated during the pandemic, wealth inequality, measured in terms of relative inequality measures, has decreased slightly,” wrote the central bank. How sustainable this development is remains to be seen. According to the information, information about the degree of wealth inequality is provided, among other things, by the ratio of the average value and the median. This number has recently decreased slightly in Germany, but is lower in Spain, Italy and Portugal. The Gini coefficient, another indicator of inequality, was also higher in Germany than in Italy and Portugal, despite a decline.
In Europe’s largest economy, the richest 10 percent of households own 56 percent of total net worth. Ten years ago it was 59 percent. The bottom half of households has to be content with a meager 3 percent. In order to be among the wealthiest 10 percent of households in Germany, net assets of around 725,900 euros were required in 2021.
The central bank conducted the study for the fourth time. The private households provided information about their assets: real estate and cars, valuable collections and jewellery, credit balances in savings accounts, home savings contracts, stocks, life insurance policies. On the debit side: mortgages, consumer loans, credit card debt, student loans.
The survey took place between April 2021 and early January 2022. According to the central bank, it is currently difficult to assess the consequences of developments since the beginning of the Russian war of aggression on Ukraine – higher inflation and interest rates, falling real estate prices.