Your house is your wealth: Property price rises give massive boost to the richest households

The richest 10pc of households in this country now have five times more wealth than poorer households.

This is despite a “significant reduction in inequality” in this country in the past few years, according to an academic study by an economist working in the Central Bank.

One of the main reasons the rich have got richer is due to “the increasing concentration of housing assets amongst richer households”, according to author Marco Moreno.

Mr Moreno, whose views are his own and not those of the Central Bank, found that housing makes up around 97pc of the net wealth of households.

There has been a sustained rise in property prices in the last decade, with prices up by 4.4pc in the last year alone.

The study, ‘Inequality and wealth distribution among Irish households: introducing new Distributional Wealth Accounts’, found that there has been an overall increase in the net wealth of Irish households over the past decade.

This has been accompanied by what Mr Moreno said was “a significant reduction in inequality”.

“This was mainly driven by strong growth in the net wealth of households in the bottom half of the distribution.

“Yet, the wealthiest 10pc of Irish households are more than five times as rich as those in the poorer half of the distribution altogether,” his research found.

Housing plays a key role in wealth accumulation.

Over the past decade those in the bottom half of the net wealth distribution mainly benefited from a reduction of their liabilities.

However, the richest 10pc of households witnessed an increase of their assets’ value, the economist found.

The academic paper found that although there has been an increase in the net wealth of households in this country over the past decade, this has not been evenly distributed across household groups.

Some of the poorest households saw an increase in their net wealth, with this primarily driven by large reductions in debts.

But for those with housing assets in the upper half of the wealth distribution rankings gained even more from property price appreciation.

The study found that the richest households held almost half of the total net wealth in the country when measured in the May to June period last year.

“Despite differences in the balance sheet composition of poorer and richer households, housing assets remain the most important balance sheet component for Irish households in all net wealth deciles,” the academic paper says.

Total share of housing assets owned by the richest 10pc of the population has increased during the past decade.

At the same time the share held by households in the bottom half of the distribution declined over time.

Those in jobs hold 40pc of net wealth, with retired people accounting for 30pc.

“Net wealth is, however, highly concentrated within Irish home-owning households, who hold almost 97pc of the total,” the study found.

The study said net wealth inequality in Ireland, as measured by the Gini coefficient, has fallen sharply to stand below most other European countries.