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News : EU Economy Last Updated: Mar 25, 2013 - 9:14 AM


Median household net wealth in Germany below counterparts in Spain and Italy
By Finfacts Team
Mar 25, 2013 - 9:09 AM

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Pope Francis 1 greets Angela Merkel, German chancellor, Rome, March 19, 2013. 

Median household net wealth in Germany is below counterparts in Spain and Italy, according to a survey published last week by the Bundesbank, the German central bank. The median level is the mid-way point where half of a sample or group are below the level and half above.  Some 3,565 German households took part in the survey.

The median household in late 2010 had accumulated net wealth -- the sum of total real assets and financial assets minus total liabilities -- of €51,400, which is less than one-third of the net wealth owned by the median households in Spain and Italy who had net wealth of €178,300 and €163,900 respectively.

Property ownership is a key differentiator: 44% of Germans own their own house or apartment. In France, 58% are homeowners; in Italy, 68%; and in Spain, nearly 83%.

Using the average, a Spanish household has a net worth of €285,800 and the average Austrian household €265,000 while German households were at €195,200.

Assets such as pension entitlements and access to free education are not accounted for.

Özgür Öner of the Federal Union of German Housing and Real Estate Associations pointed to the strong rental market in Germany in an interview with Deutsche Welle, the German broadcaster. "That also has to do how, after the Second World War, we met the challenge of providing apartments relatively quickly and that they were also reasonably priced," Öner said.

Economists at the Cologne Institute for Economic Research criticise the methods of collecting data used in the Bundesbank study. The average net worth of households was calculated, but the problem with this approach is that German households have an average of two members. In Spain, the average is 2.7 people. That means that household assets are distributed across more people than in Germany.

A second criticism raised by members of the institute is that the study "compares apples and oranges." The numbers are based on a Europe-wide survey conducted by central banks. While Germany's numbers are from 2010, Spain's were collected in 2008. That was when the property bubble burst in Spain and before a big drop in house prices.

In Germany, the top 10% of households by net worth own 60% of the country's wealth.

More than one region in seven with GDP per capita above 125% of the average…

Also last week, Eurostat, the EU statistics office, reported that the leading regions in the ranking of regional GDP per capita in 2010 were Inner London in the United Kingdom (328% of the average), the Grand Duchy of Luxembourg (266%), Bruxelles/Brussel in Belgium (223%), Hamburg in Germany (203%), Île de France in France and Groningen in the Netherlands (both 180%), Bratislava in Slovakia (176%), Praha in the Czech Republic (172%), Stockholm in Sweden (168%) and Vienna in  Austria (165%).

Among the 41 regions exceeding the 125% level, eight were in Germany, five each in the Netherlands and Austria, four in Belgium, three each in Spain, Italy and the United Kingdom, two each in Finland and Sweden, one each in the Czech Republic, Denmark, Ireland, France and Slovakia, as well as the Grand Duchy of Luxembourg.

GDP is not a useful metric for the Irish standard of living because of multinational sector distortions.

Using individual consumption per capita, we are at the same level as Italy.

Eurostat said that it should be noted that in some regions the GDP per capita figures can be significantly influenced by commuter flows (part of Luxembourg's workforce live in neighbouring countries). Net commuter inflows in these regions push up production to a level that could not be achieved by the resident active population on its own. The result is that GDP per capita appears to be overestimated in these regions and underestimated in regions with commuter outflows.

…and one in four below 75%

The lowest regions in the ranking were all in Bulgaria and Romania, with the lowest figures recorded in Severozapaden in Bulgaria (26% of the average), followed by Severen tsentralen in Bulgaria and Nord-Est in Romania (both 29%) and Yuzhen tsentralen in Bulgaria (30%). Among the 68 regions below the 75% level, fifteen were in Poland, seven each in the Czech Republic, Greece and Romania, six in Hungary, five each in Bulgaria and Italy, three each in France (all overseas departments), Portugal and Slovakia, two in the United Kingdom, one each in Spain and Slovenia, as well as Estonia, Latvia and Lithuania.

Living standards falling in most Member States [pdf]

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