Equity 31 March 2023, 10:19am

Average household wealth in Hungary does not compare well with the rest of the EU

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According to the EU-wide Household Finance and Consumption Network's survey, the average net worth of Hungarians is at the bottom of the league, though the good news is that it is rising year on year. The latest data from the National Bank of Hungary (MNB) shows that the average net worth of those in the top 10% of households was close to HUF 190 million, while the average net worth of the poorest was minus HUF 1 million. A similar concentration of wealth can be observed in other European countries, but it is interesting to note that the median household wealth rises with age, unlike in Hungary.

The richest Hungarian families have HUF 189 million

Last year, the MNB published preliminary data from the household wealth survey for 2020, which shows, among other things, that

the average wealth of the top 10% of households was close to HUF 190 million per family, while the average wealth of the poorest was minus HUF 1 million

(as liabilities [loans and other debts] exceed their financial and non-financial assets). The graph below illustrates the sharp gap between the richer and poorer Hungarian families, but even compared to the 9th decile, the average wealth of the 10th decile is still out of line.

01 - Average net wealth per household by deciles

We were curious to see how these figures had evolved in other European countries, and although there were several difficulties in collecting the data, the graph below shows that, as in Hungary, there is a significant concentration of wealth in the wealthiest families in the EU countries surveyed. In Finland, for example, the average wealth of those in the top 20% is close to €730,000, more than double the average wealth of Hungarians in the top 20%.

Data are also available for Spain, but we were unable to include them in the figure due to the different wealth class divisions. In this case, the average wealth of those in the bottom 25% is minus €1,000 and the top 10% have an average wealth of €1.5 million.

02 - Average net wealth some EU countries quintiles

The Household Finance and Consumption Survey (HFCS) is conducted every three years in the EU, with four waves of data collection so far (2010, 2014, 2017, 2020). While the fifth wave is already underway this year, most countries have not yet published their 2020 data, and aggregate data for 2020 are not available on the ECB website. In order to collect data, we have searched the statistical and central bank websites of all EU countries, but unfortunately only a few countries have published their latest HFCS data in a meaningful and comparable way, so our comparative graphs with recent figures are limited to wealth distribution by wealth quintile and wealth distribution by age.

Hungary is out of step

An interesting wealth distribution for Hungary is shown in the graph below, which shows the median net wealth per household, broken down by the age of the main earner.

While in most countries median wealth rises with age (and tends to stagnate from around 60), in Hungary the wealthiest households are those with a main breadwinner aged 46-55, from which point median wealth declines.

(Missing data for some countries are due to different age distributions)

03 - Distribution net wealth by age of main breadwinner

We have also looked at how the wealth of Hungarians has evolved in the EU compared to previous years, but the picture is rather dismal:

in 2017, the average net worth of Hungarians was €73,000, putting us at the bottom of the league, with only the Latvians ranking worse than us among EU countries.

However, the good news is that we see an improvement compared to 2014, and using the MNB's 2020 data, the average net worth could exceed €100,000, although this would presumably not mean much improvement in the overall ranking.

(The graph below shows assets excluding public and occupational pensions)

04 - Average net wealth in Eu in the years under review

Net assets are the difference between gross assets and gross liabilities. The assets are made up of real and financial assets.

Real assets include: residential property, other real estate, vehicles, valuables, proprietary businesses.

Financial assets in the survey include deposits (demand and time deposits), investment funds, bonds, shares in other companies, shares, investment accounts, loans to individuals, other financial assets, private pension savings, life insurance.

Liabilities (loans) consist of mortgage and other real estate loans, credit card debt and other commercial and private loans.

In terms of financial assets, Hungary is a notch better off, with the 2017 data showing the Hungarian median at around €1,000, leaving the Lithuanians, Greeks, Croats and Latvians behind, although still lagging significantly behind the top-ranked Luxembourg, where the median value of household financial assets is €30,000.

05 - Financial assets in the EU in the years under review

Of course, in this case our poor performance is not so surprising either, looking at the latest 2020 wealth rankings of the poorest and richest Hungarian families. Among the wealthier families, the majority own a house or a property, or a car, and they are also more likely to have some kind of financial asset (bank deposit, government bond, other savings). By comparison, only a third of poorer households own a house or a car, and very few have financial savings, but they have no shortage of loans.

06 - Share of each asset among the poorest and richest

Speaking of loans, at least there is one aspect in which Hungary is not doing badly in the EU, with 32% of Hungarian households having some kind of debt in 2017, which is quite low compared to other countries and even an improvement from 2014. Finland, the Netherlands and Cyprus had the highest number of households in debt in 2017.