THE NET financial assets of Irish households have fallen 42 per cent since peaking at almost €140 billion in 2006, according to new figures from the Central Statistics Office.

In 2008 alone, net financial assets of households fell by 31 per cent in the household sector. This was mainly due to the sharp decline in stock markets over the course of the year. Average financial assets – which include deposits, shares, life insurance and pension funds – stood at €179,000 per household at the end of 2008, compared to €209,000 at the end of 2006. The corresponding level of household debt continued to rise, reaching €128,000 in 2008 up from €124,000 at the end of 2007.

“This combination of falling assets and rising liabilities has squeezed the net financial worth of Irish households, which has almost halved since 2006,” said NIB chief economist Dr Ronnie O’Toole. The average net financial worth of households fell to €51,500 in 2008 from €95,000 in 2006, he noted.

The CSO explained that yesterday’s figures excluded the value of property assets. Given the fall in property prices, “the overall net worth of households has therefore fallen very substantially in the last two years,” it said.

According to NIB’s recent Wealth Report, the accumulated net wealth of the average Irishhousehold has fallen by €153,000 over the last two years.

However, Dr O’Toole predicted that personal wealth will stabilise in 2010 “as financial markets recover and savings surge”.

“While the value of houses has continued to fall, 2009 to date has seen some recovery in financial assets, with three consecutive months of positive growth to the end of May,” he pointed out.

For example pension funds, have risen 14 per cent since the beginning of March, giving a gain for the year to date of over 5 per cent, he added.