Strong economic growth has lead to a big increase in the wealth of business owners, professionals and company executives in recent years, according to a report by Bank of Ireland Private Banking.
Evidence of the significant growth in Irish affluence includes the doubling of house prices between 1995 and 1999, the jump in luxury car sales, growth in Capital Gains Tax receipts and the increase in credit card ownership. The Irish economy is set to become one of the richest states in the EU, the report concludes. "Having surpassed the UK, both Gross Domestic Product and Gross National Product per capita should over the next decade close the gap on the richer states in the EU and the US," according to the Wealth Report 2000. Bank of Ireland is restructuring its private banking operations to deal with increasing demand for wealth management services from the growing number of Irish high net worth (HNW) individuals. The bank expects this HNW segment to continue to flourish against a background of rising disposable incomes, a tight labour market, rising demand for high skilled employees, trade and budgetary surpluses, and falling unemployment. Ownership of financial assets such as houses, cars, shares, and their appreciation over time has boosted the wealth of many individuals.
Average house prices have doubled between 1995 and 1999 with a 90 per cent rise nationally and a 123 per cent rise in Dublin. Record prices have been attained at house auctions. The emergence of the "million-pound housing estate" marks the investment of high net worth individuals in their principal residences and draws attention to the growing number of affluent individuals, the report states. Property investors have benefited both from the appreciation in property values and from rental income growth with a 62 per cent rise in the number of households renting privately between 1991 and 1997. Sales of luxury cars have increased by 158 per cent over the 1994 to 1999 period with the biggest growth recorded in the most expensive ranges of cars, the report states.
The value of the ISEQ Index of Irish shares has increased by more than 218 per cent since 1995, boosting the personal wealth of people who hold shares either directly or through funds. Increasing disposable income and lower interest rates mean more and more people invest in shares, directly and indirectly. Equity turnover on the ISEQ rose to more than £57 billion (£72.38 billion) last year from in excess of £7 billion in 1996.
Evidence of the growing number of individuals accumulating wealth also comes from the Capital Gains Tax payments to the Revenue. CGT receipts rose by more than 600 per cent between 1993 and 1998 while the number of CGT assessments was up 245 per cent between 1992 and 1998. The value of the average assessment rose from £6,235 in the 1992-1993 tax year to £13,608 in 1997-1998.
Personal debt built up on credit cards was 25.7 per cent ahead year on year by June when the number of credit cards issued was up by 19.2 per cent. At the end of June there were 1,733,000 credit cards on issue to Irish residents, or 460 cards per 1,000 of population. It represents one of the highest levels in the EU.
