Median value of Estonians' net assets grows to €66,000

Money. Source: Siim Lõvi /ERR

The median value of net assets grew from €43,500 in 2013 to €66,200 in 2021 or by more than 50 percent in Estonia, a recent overview by the Bank of Estonia and Statistics Estonia reveals.

Growth of net assets was especially rapid from 2017-2021, coming to nearly 40 percent.

Net assets (asset value after obligations) are unequally distributed in Estonia, with relevant inequality greater in Estonia than in most other EU countries. At the same time, the rate of inequality remained unchanged between 2013 and 2021.

The wealthiest 5 percent of households own almost half of all net assets.

One reason for asset inequality is the relative importance of business assets. Inequality is reduced by the fact most Estonian households own residential property instead of renting.

Real estate makes up the lion's share of most Estonians' assets, with business assets counting for 25 percent and deposits around 10 percent. Almost all households have financial assets in the form of deposits, while 90 percent of households also have real assets.

The average household owns €74,300 worth of real assets, while it comes to €5,100 for financial assets.

Obligations are dominated by mortgages. The average household has €41,000 worth of real estate debt.

But the study also found that Estonian households' loan burden is lower than the Eurozone average. The share of families unable to secure a loan from a bank (or secure a big enough loan) has remained around 7 percent throughout the survey period.

In the last decade, which fell between the global financial crisis and the coronavirus crisis, Estonia has seen dynamic economic development. Both income and asset prices have grown rapidly to increase families' prosperity.

Liquidity buffers saw solid growth 2017-2021, with the ratio between liquid assets and income more than doubling. This was caused by rapid growth of deposits, whereas deposits swelled for people of all income groups. The median value of deposits grew from €1,900 to €4,300 during that period.

It is likely that deposits grew in the wake of the coronavirus pandemic, which was still going on during the study period. It saw several restrictions, which lessened households' opportunities to spend (vacations, entertainment, eating out). As a result, savings grew, primarily in the form of bank deposits.

The new dataset made it possible to measure the financial vulnerability of households in 2013-2021, unto the Euribor rate climbing to 6 percent, Bank of Estonia said. "Assessments based on models did not show a spike in loan arrears. Increased interest costs due to Euribor hikes hit wealthier families relatively harder as they have considerable real estate loans. At the same time, wealthier families also have more liquid assets and ways of curbing their consumption expenses, and it is to be believed they will be able to keep servicing loans if expenses do not grow too quickly."


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Editor: Marcus Turovski

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