Household wealth in the euro area: The importance of intergenerational transfers, homeownership and house price dynamics

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The HFCN collects household-level data on households' finances and consumption in the euro area through a harmonised survey. The HFCN aims at studying in depth the micro-level structural information on euro area households' assets and liabilities. The objectives of the network are: Terms of use: Documents in1) understanding economic behaviour of individual households, developments in aggregate variables and the interactions between the two;2) evaluating the impact of shocks, policies and institutional changes on household portfolios and other variables;3) understanding the implications of heterogeneity for aggregate variables; 4) estimating choices of different households and their reaction to economic shocks; 5) building and calibrating realistic economic models incorporating heterogeneous agents; 6) gaining insights into issues such as monetary policy transmission and financial stability.The refereeing process of this paper has been co-ordinated by a team composed of Gabriel Fagan (ECB), Pirmin Fessler (Oesterreichische Nationalbank), Michalis Haliassos (Goethe University Frankfurt), Tullio Jappelli (University of Naples Federico II), Sébastien PérezDuarte (ECB), Jiri Slacalek (ECB), Federica Teppa (De Nederlandsche Bank), Peter Tufano (Oxford University) and Philip Vermeulen (ECB).The paper is released in order to make the results of HFCN research generally available, in preliminary form, to encourage comments and suggestions prior to final publication. The views expressed in the paper are the author's own and do not necessarily reflect those of the ESCB. Results from the Eurosystem Household Finance and Consumption Survey reveal substantial variation in household net wealth across euro area countries that await explanation. This paper focuses on three main factors for the wealth accumulation process, i) homeownership, ii) housing value appreciation and iii) intergenerational transfers. We show that these three factors, in addition to the common household and demographic factors, are relevant for the net wealth accumulation process in all euro area countries, and moreover that, using various decomposition techniques, differences therein, in particular in homeownership rates and house price dynamics, are important for explaining wealth differences across euro area countries. Acknowledgements This paper uses data from the Eurosystem Household Finance and Consumption Survey (HFCS

28. Pain and social exclusion among the European older people

“…Of course the self-reported values might not reflect the actual market values. However, a comparison between values declared in SHARE Wave 4 and in the Eurosystem Household Finance and Consumption Survey for the same year shows only minor differences, although the latter are systematically higher (a similar evidence is also reported in Mathä et al 2014 Only three countries show a percentage higher than 15: Sweden, the Netherlands and Denmark. One of the reasons for the three exceptions may be the existence of mortgage formulae that allow the beneficiary to repay only the interest, thus leaving the debt and the house to the offspring.…”

Partnership patterns and homeownership: a cross-country comparison of Germany, the Netherlands and the United Kingdom

“…For instance, it is suggested that owner-occupied homes tend to be larger, of better quality and situated in generally more attractive residential environments (Megbolugbe & Linneman, 1993;Mulder et al, 2006;Mulder & Wagner, 1998). From a financial perspective, the purchase of a home can be an attractive and relatively safe long-term investment, particularly in countries that actively promote homeownership with subsidies and tax incentives (Matha et al, 2014). However, as briefly mentioned above, the initial financial costs, including for instance transaction charges and transfer taxes, as well as any ongoing costs associated with the repayment of mortgages and the maintenance of the dwelling, are all burdens to which renters are largely immune.…”

Exploring Differences in Household Debt across the United States and Euro Area Countries

“…Moreover, they have been employed to compare differences in income distributions across regions (Nguyen et al 2007) as well as across countries (e.g., Blau and Kahn 1996). Following the recent availability of microsurveys with information on household balance sheets, decomposition methods have also been used to perform comparisons in household finances across time or countries (see, e.g., Gale and Pence 2006, Bover 2010, Sierminska and Doorley 2012, Christelis, Georgarakos, and Haliassos 2013, Mathä, Porpiglia, and Ziegelmeyer 2017.…”

“…They conclude that the importance of household characteristics in determining differences in several assets and debts varies by age. Finally, Mathä, Porpiglia, and Ziegelmeyer (2017) use more recent cross‐country survey data that are fully harmonized to examine the importance of intergenerational transfers, home ownership, and house price dynamics for wealth differences in the euro area.…”