“Households and their finances” – Results of a panel study on the portfolio structure and the distribution of wealth in Germany

The panel survey

As part of its panel study on “Households and their finances” (Private Haushalte und ihre Finanzen, or PHF), the Bundesbank conducted its first survey of the wealth, debt and financial activities of households in Germany between September 2010 and July 2011.Participation in the survey was voluntary. The data mainly comprise households' balance sheets, their private pension entitlements, savings activity and income as well as data on employment, consumption, self-assessments and expectations relevant for decision-making, such as price rises or the probability of being made unemployed. The survey also comprised demographic characteristics. The PHF therefore provides a relatively comprehensive and detailed picture of the assets and debts as well as of the savings behaviour of households in Germany. Households show a high degree of heterogeneity especially in terms of wealth, both on a national and international scale, which means that the analysis at the household level provides important additional information which goes beyond the macroeconomic aggregates.

The PHF is part of the new and harmonised “Household Finance and Consumption Survey” (HFCS), which is being carried out in all euro-area countries.[1] The aim of the survey is to further improve the basis for decision-making of Eurosystem central banks. The study results help to provide a better understanding of consumption and savings behaviour and of the distribution of household wealth and debt, for instance. They therefore facilitate, inter alia, a better assessment of the effects of monetary policy or the stability of the financial system.

Some 3,565 German households took part in the first wave of the PHF survey, with the end of 2010 generally serving as the reference point of the data.More affluent households were overrepresented in the survey to enable a better analysis of the composition and distribution of wealth. Nevertheless, the survey still draws on a representative sample in the strict sense of the term.[2]

The first wave of the HFCS is to be followed by further surveys, which are to be carried out at regular intervals every few years. The next round is scheduled to take place this year and will involve as many of the households surveyed in the first wave as possible in order to be able to adequately trace any changes and developments over time.

The survey and the applied methodology were presented in detail in the Bundesbank’s Monthly Report for January 2012, together with provisional figures, above all on property ownership and the associated debt.[3] The data preparation has now largely been completed, which means that data relating to the distribution of aggregates, such as gross assets and net assets, are now also possible. Further publications on other topics, such as savings and debt, are also in the pipeline.

Results for the portfolio structure and the distribution of wealth

The data gathered as part of the PHF study, with the reference date being the end of 2010, show that average gross household wealth is estimated to stand at around € 222,200 and average net household wealth at around € 195,200 (ie assets minus debt). This represents the mean value, ie the extrapolated total of all assets divided by the number of households.

However, the wealth of the “average” household is better measured through the median. If households were to be arranged according to the value of their wealth, the median value would thus occupy the middle position: there are just as many wealthier households as there are poorer households. The median gross wealth stands at € 67,900 and the median net wealth amounts to € 51,400.These median values usually lie significantly below the corresponding averages: the majority of German households, around 73% for Germany as a whole, have a "below-average" net wealth. Therefore, both the mean and median values of net wealth in Germany are lower than in other large countries in the euro area, for which comparable data are available.The differences in the median values are considerably more pronounced than in the case of the mean values.

A frequently used measure of inequality in a distribution is the Gini coefficient. It values a perfectly even distribution as 0% and a completely uneven distribution as 100%. Whereas the Gini coefficient for gross household income stood at 42.8% in the PHF survey, it amounted to 71.3% for gross wealth and 75.8% for net wealth. Thus, wealth is more unevenly distributed than income – as is generally the case. The richest 10% of households (based on the respective definition) account for 55.7% of the total gross wealth and 59.2% of the total net wealth of all households. The highlighted inequality of wealth broadly corresponds to the outcome of other comparable surveys for Germany.

The interpretation of the data now available will require careful analysis in the future.However, it is already worth highlighting at this stage that not all claims to assets of households are included in the PHF data.In particular, claims on the statutory social insurance system are not covered by the PHF data, whereas private pension insurance and life insurance policies have been taken into consideration.It is to be expected that this would result in the overstatement of the uneven distribution of wealth.On a more general level, statements relating to the private wealth of households only offer a limited insight into the living standard or wealth of a society.This applies, in particular, when making international comparisons.Other sectors such as the state, for example, can equally have positive or negative net wealth.

Besides an analysis of the distribution of wealth for households in Germany, the PHF data also enable analyses to be made for certain categories of households. These data, for example, demonstrate clear regional differences as well as distinctions between property owners and tenants. For instance, wealth in eastern Germany (including Berlin) is significantly lower than in western Germany. In western Germany, the median value of net wealth stands at € 78,900, whereas in eastern Germany it amounts to € 21,400. House owners are typically much wealthier than households without property ownership. In Germany, the median net wealth of owners of unencumbered property is valued at € 255,600. Property owners with a mortgage are shown to have a median value of € 160,200. For rental properties, this value stands at only € 10,300.

One of the notable benefits of the PHF is that it also allows for a detailed overview of the value and distribution of individual assets. This allows, inter alia, for statements to be made in terms of which households are particularly affected by price changes to certain assets, such as real estate or shares, or how these changes affect provisions for old age.

Owner-occupied properties constitute the most significant asset of German households.The mean value across all categories of property owners stands at € 205,800 (median value: € 168,000). The rate of home ownership in Germany equates to 44.2%. This rate is significantly higher in western Germany (47.1%) than in eastern Germany (33.7%). The proportion of owner-occupied housing is rather small in comparison with the rest of Europe. In France, around 58% of households live in their own homes, while this rate is substantially higher in Spain (83%) and Italy (69%). Unlike all these countries, the German median household is not an owner-occupied property. A similar rate to Germany can be observed in Austria (48%). In Switzerland, this rate is estimated to be even lower at 40%. Approximately 18% of German households own property in which they do not live themselves – this includes tenant households.

By far the most widespread assets are current accounts – as found in the case of 99% of households – along with savings deposits (78%).Endowment life insurance policies come a distant second with a share of 40%, followed by savings and loan contracts (36%).Some 31% of households had concluded at least one contract relating to private pension provisioning.The predominant type of investment securities is mutual fund shares (22%).By comparison, shares (11%), bonds (5%) and certificates (2%) were only directly held by a small proportion of households. As is to be expected, investment securities are often found among wealthy and high-income households. Of the wealthiest 10% of households (net wealth), 43% possess mutual fund shares, 30% and 19% own shares and bonds respectively.

Savings and debt

Over time, a country’s asset structure changes above all as a result of saving and inheritance. The PHF is the only survey in the euro area containing detailed questions on savings behaviour. The results show that more than 70% of all households accumulate savings by depositing them on an account, by paying contributions into asset-accumulating insurance schemes and by acquiring securities or repaying loans; most of these are effected in regular instalments. However, it is not the case for all households that these amounts exceed the outflows that take place at the same time, thereby resulting in net asset formation. If households are grouped according to the age of the main income earner, the mound-shaped profile that is typically found internationally is revealed: the assets of young households are relatively low. The largest values are attained by households in the years prior to and after retirement, whereas assets of very old households are lower again. Besides the savings dynamics, inheritances and gifts also play a role: as a rule, inheritances are received by middle-aged persons and gifts are given in old age. The size and composition of a household, too, change according to age cohorts.

The significance of private pensions is also reflected in the PHF data. For example, pensions are regarded as the most important reason for saving by more than 20% of households. Similarly high values were only recorded for provisions for emergency situations. In households with main income earners between the age of 25 and 44 close to 40% have at least one Riester pension contract. In the case of over 54-year-olds, it is only 17%.

The picture of households’ financial situation is rounded off by taking a look at debt: according to the PHF, 47% of households in Germany have debt – although in most cases, they also have a sizeable asset stock. In the survey, debt comprises secured loans (mortgages) and unsecured loans, such as consumer loans, student loans (BAföG) or revolving credit card debt. Mortgage loans are serviced by 21%, while unsecured loans are held by 35% of households. Despite debt being relatively widespread, the PHF provides no indication of the problem of over-indebtedness prevailing in Germany. A median debt level of € 80,000 (mean value: € 110,000) was found for households with mortgage loans; for debtors with unsecured loans the median debt level came to around € 3,170 (mean value: € 9,600). In the case of around 80% of debtors, debt servicing (interest and repayment) does not exceed the value of 23.1% of gross income. Likewise, in around 80% of households, pure interest payments amount to under or close to 10.5% of gross income. According to the PHF, a share of 7.4% of households have negative net assets, of which the respective median and mean value is € 4,000 and € 14,200.

  1. Ireland and Estonia did not participate in the first wave of the HFCS. Information on the HFCS can be found on the ECB’s website at
  2. The impact of the oversampling of wealthy households is compensated by weighting. Households with an extremely high level of wealth were not included in the sample: such volumes of wealth are too infrequent for them to be accurately represented in a random sample of limited size.
  3. For a description of the study with technical details, see Ulf von Kalckreuth, Martin Eisele, Julia Le Blanc, Tobias Schmidt, Junyi Zhu, The PHF: a comprehensive panel survey on household finances and wealth in Germany, Deutsche Bundesbank Discussion Paper No 13/2012.