Sharp Gap – The average renter’s net worth is well below that of the homeowner

According to new data collected by the Central Statistics Office in its latest Household Finance and Consumption Survey, homeowners’ net worth far exceeds rented households, with renters barely in positive territory.

The median net wealth of households owning their own home reached almost €304,000 in 2020, the latest year for which figures are available.

In contrast, the median rental household had only €5,300 when the value of debt was deducted from the value of assets.

The huge gap between the two cohorts has major implications for housing, pension and healthcare policies, and how the government will provide for those who are poor in old age.

In addition, the wealth gap is likely to have widened over the past two years as the savings rate hit record levels and house prices continued to rise at double-digit rates each year, adding tens of thousands to the value of homeowners’ wealth.

Even if the value of the living space – usually the most valuable asset in a household – is deducted, the discrepancy remains large.

The average home value in Ireland at the time of the CSO survey was €260,000, meaning homeowners still had around eight times more non-home assets than their peers who rented.

However, almost seven in ten Irish households are their main residence, meaning a large proportion of the population has an anchor of wealth.

For homeowners with a mortgage, the average loan-to-value ratio was just over 45 percent, while only 4 percent with a mortgage greater than their home’s value had negative equity.

All but 3 percent of households own some form of financial asset, such as savings, stocks, bonds, investments, or pensions. For households with financial assets, the median value is 13,300 euros.

Most also have debt, with 68 percent having either a mortgage, personal loan, overdraft, or credit card balance. The median household debt in Ireland was €25,000.

The net wealth gap between homeowners and renters is even more pronounced when looking at the richest and poorest groups as a whole.

The richest 10 percent had net household wealth of more than $700,000, while the bottom 10 percent had less than $600.

The CSO said the wealth gap was likely underestimated in the survey as only a few households in the top 1pc were included, meaning a significant portion of wealth in the top decile was not captured.