German households are among the poorest in the eurozone, at least on paper, with an average net assets of €195,000, while the population of southern European countries such as Italy, Spain, Cyprus and France, have larger assets, according to a survey of the European Central Bank (ECB).
The survey, which is at its first edition, will add a new dimension to the discussion on how countries of northern Europe are forced to support financially weaker states in the South, but does not provide a complete picture of living standards, influenced by factors such as social protection and infrastructure, notes the Wall Street Journal.
The report is based on data from 2009 and 2010, years in which the euro zone debt crisis was in its infancy. The report also focuses on home ownership, household size and small business ownership. This approach favors the southern Europe. In Germany, for example, the percentage of people who own homes is quite low, the U.S. publication notes.
However, the report highlights that the population of some countries hit hard by the debt crisis is not as bad a situation as one might think.
Luxembourg is in the first position in the ECB study, with an average net worth of over €700,000 per household in 2010, the latest year for which data are available. In second place is Cyprus, with €670,000. In March, Cyprus has concluded an agreement with the eurozone and the IMF for a €10 billion loan needed to stabilize state finances, a program subject to harsh restructuring of the banking sector, which includes imposing losses to depositors.
In Germany, the average net wealth stood at €195,000, in the Netherlands it was €170,000 and in Finland was €161,500. In all these three countries the opposition to the financial support of southern Europe is high.
Spain recorded a net wealth per household average of €291,000, Italy – €275,000 and France – €233,000, the ECB study said. The poorest in the eurozone are the Slovaks, with an average of nearly €80,000 per household.
ECB findings might encourage attempts to involve the private sector more in future government interventions to rescue from collapse the financial institutions by imposing taxes on wealth or large deposits. Such measures would reduce costs for Germany and financially sound states in the eurozone, analysts said.
Several factors influenced the ECB statistics. In Germany, interest on mortgage loans is not treated favorable in terms of taxes like in other parts of Europe. In addition, German banks usually require a large down payment for buying a house, discouraging the purchase of dwellings and encouraging renting.
“The role of home ownership is very important,” says the ECB report.
Data do not reflect also the decline in house prices and other assets in the past three years. Housing prices were estimated by respondents in a survey in which there were consulted about 60,000 households in the eurozone, so that might be different from the market circumstances at that time. Households in Southern Europe tend to be higher than in countries such as Germany, thus increasing the asset value.
The new report does not include any private pension programs, widespread in Germany. ECB included in the total assets real estate, vehicles, bank deposits, investments and pensions, less the value of liabilities, such as mortgages, debit card debts and other debts.
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