Danish households' net wealth position


This paper provides an assessment of the net wealth position of Danish households.

Conducting such an assessment, it is vital to not only focus on the household debt, but also to include assets held by households; not only housing assets, but also pension assets and financial assets such as bonds and equities.

The net wealth position of Danish households appears fundamentally sound on aggregate, with net wealth having risen from some 200 per cent of disposable income in 1993 to 450 per cent in 2006 – around the peak of the asset price cycle – before subsiding to some 375 percent of disposable income by the end of 2008.

This is still a level much higher than during the last economic slow down between 2001 and 2003. Households have increased their asset stock considerably during the past decades through savings, including more widespread participation in labour market pension schemes, and helped by increasing property and equity prices. Household debt has also increased, although not to the same extent as assets, and the asset-to-debt ratio has remained around or above 2-to-1.

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