The rise in bond and equity prices in 2019, alongside the increased deposit flows and the declining private debt have recently boosted the net financial wealth per household, while a significant rise in property prices has had a positive impact on value of their non-financial wealth, Alpha Bank states in a report today.
Specifically, according to a recent Credit Suisse study (The Global Wealth Report 2019), from mid-2018 to mid-2019 adult wealth in Greece increased by 2.7% on a year-over-year basis, while non- financial wealth surged by 1.6%. Lifetime human wealth is difficult to estimate but is sure to be strengthened as prospects for the country’s growth potential and consequently future median income improve, while there is good potential for job creation.
Credit Suisse research shows that wealth per adult followed a steady upward tendency until 2007, while households’ annual credit growth rates were particularly high, mainly with the aim of investing in housing and keeping their annual savings rates high. The financial crisis has weakened the wealth of Greek households since 2008, and to date the losses have not been recovered.
Specifically, during the 2007-2012 period, wealth per adult fell by almost half (-48.4%), which can be attributed to the prices of debt instruments, mainly equities and bonds plummeting, and the combined effect of falling stock prices in real estate, but also the restriction of private construction activity. At the same time, household deposits declined particularly rapidly during the three-year period of 2010-2012, and since 2010 the annual rate of lending to households has fallen into negative territory. In 2013, wealth per adult in Greece recovered, however temporarily, as over the next two years wealth declined again by 22%, with deposits and property prices dropping further.
In 2019, the recovery of total net wealth can be attributed to the following factors:
- The real estate market recovery, as reflected in the 6.3% rise in residential property prices in the first half of 2019,
- The increase in the prices of Greek government bonds,
- The increase of the General Index of the Stock Exchange since the beginning of the year, by 41.9%,
- The boost in household deposits by € 4.2 billion in the first nine months of 2019,
- Further reduction of private debt /ibna