Wealth in Austria very unequally distributed

2023-06-15 07:07:10

This emerges from a National Bank study on wealth distribution. However, a direct comparison with other countries is difficult because of institutional differences, the study authors warn. In Austria, for example, there is a good public pension system, which leads to a different saving behavior than in countries where this is not the case.

In addition, in Austria only about half of the households (47.6 percent) are homeowners. “Austria and Germany are tenant companies,” said National Bank economist Martin Schurz on Wednesday when the study was presented. Almost all homeowners are in the top half of the net wealth distribution, while the bottom half of the net wealth distribution is mostly made up of households who rent their homes. Only Germany has a higher proportion of tenants in the euro area.

The OeNB study “Household Finance and Consumption Survey (HFCS 2021)” is the fourth wave of a survey in which the National Bank has been surveying the wealth of private households since 2010. The study examines all euro countries, but also additional countries such as the Czech Republic. The study is important for the central bank to see the vulnerability of households and thus to be able to draw conclusions about risks to financial market stability. You also want to know how households are doing financially and to see the effect of monetary policy.

29.9 percent of households are in debt

As in all euro countries, the distribution of net wealth in Austria is much more unequal than the distribution of income. Direct business ownership and real estate rental income are concentrated in the top tenth of the net wealth distribution.

However, the authors of the study emphasize that the analysis of wealth concentration cannot be carried out solely with the HFCS data. This is one of the reasons why the ECB will soon provide distribution assets accounts. In addition, one cannot do poverty research or wealth research with this data, emphasizes Schurz. So no homeless were interviewed, “we have an under-recording of really poor people”. The maximum value for net assets is also 12 million euros, “then you can imagine how much is missing at the top”.

It is striking that particularly wealthy but also particularly poor people place themselves closer to the middle of the distribution of wealth. “People who have millions don’t think they’re in the top 5 percent of households in Austria.”

Few households in Austria are in debt (29.9 percent). Only 13.9 percent have secured debt, while about 17.4 percent have unsecured debt. Secured debt is held primarily by households in the top half of the net wealth distribution. Therefore, the potential risks to financial stability stemming from household indebtedness are relatively low in Austria compared to other euro area countries, the study concludes.

Austrian households have financial portfolio profiles with very low risk. Few households hold assets that are typically considered risky. Only 12.3 percent of households hold mutual funds, only 6.1 percent own stocks and only 2.5 percent own bonds. When households hold risky assets, they make up about 40 percent of their financial portfolio.