New research from the Central Bank shows that Irish households are more resilient to the economic impact of the Covid-19 pandemic than the financial crisis in 2008.
The Central Bank said that data gathered for its Household Finance and Consumption Survey highlighted the improved financial position and resilience of households before the Covid-19 crisis compared to the lead-up to the 2008 financial crisis.
The survey was carried out before the coronavirus outbreak and examined the years between 2013 and 2018 only.
But the Central Bank said the data provided "insight" into issues relevant to the assessment of the economic impact of the pandemic on households this year.
In a new Research Technical Paper published today, the Central Bank said that household net wealth grew by over 74% for the median household to €179,200 between 2013 and 2018.
It noted that net wealth growth was driven mainly by house price developments and households paying down mortgage debt.
Meanwhile, inequality - as measured by the Gini coefficient - fell between 2012 and 2018, which indicated that there was a more equal distribution of wealth by the end of the period under review.
The Central Bank said that a key driver of this was the decline in negative equity, which fell from 33% of mortgaged households in 2013 to just 4% in 2018.
Median gross household income also surpassed its previous peak in 2007, reaching €47,700 in 2018, an increase of 18.5%.
The Central Bank also said that households' debt-to asset and debt-to-income ratios declined between 2013 and 2018 and households' financial buffers - liquid savings net of debt - increased.
The percentage of income used for repaying debt had also fallen since 2013, mainly due to rising incomes.
The Central Bank said that, overall, households in 2018 were less likely to say they were credit constrained compared to 2013. But it noted that one in eight household reported having expenses greater than their income.
According to the Central Bank, the distribution of wealth, incomes and spending is crucial to understanding the differential impacts of economic shocks and recoveries across households and how their responses to changes in the economic environment affect macroeconomic aggregates.