Household wealth keeps on growing

Pension savings and wealth tied up in housing makes the Danes household wealth grow - debt and spending are not increased correspondingly. Private economist Louise Aggerstrøm explains.

New figures from Statistics Denmark show that household wealth is continuing to grow, with many choosing to keep hold of their money rather than step up their spending.

The debt and wealth data for 2017 published recently by Statistics Denmark show that savings exceed debt by a wide margin. The wealth of an average Danish household exceeded debt by DKK1.975m in 2017, up almost DKK77,000 on the year before.

Wealth of an average Danish household

DKK 1,5 million


Wealth tied up in housing

DKK 903.056

Pension savings

This wealth is mainly tied up in housing. The average household has housing wealth of almost DKK1.5m, although this varies widely depending on the type of home. While housing wealth averages almost DKK2.8m for homeowners, the corresponding figure is only DKK287,000 for families in rented apartments and co-operative housing. The other side of the coin, though, is that homeowners have much more debt (DKK1.7m per household) than tenants (around DKK200,000).

Bulging pensions

The other main component of wealth is pensions, which have grown rapidly in recent years. The average household’s pension wealth grew by more than DKK34,000 in 2017 to just over DKK900,000. This means that, even if we ignore pensions, Danish households still have net wealth of around DKK1m on average.

Louise Aggerstrøm

Private Economist, Danske Bank

Pension assets have grown steadily in recent years but there are signs that this growth is set to slow. This is partly because the expansion of the pension system is more advanced and partly because the return on pension assets is likely to be somewhat lower in coming years.

Holding onto their money
While pension savings look set to grow more moderately, we expect rising incomes and further strengthening of the housing market to continue boosting household wealth in the years ahead.

We are not seeing any serious signs of mounting debt. Average debt fell by DKK3,600 from 2016 to 2017, which does not sound much but needs to be seen in the light of debt normally increasing during an economic upturn such as the one we are seeing now. This suggests that Danes are still very wary about loosening the purse strings in the wake of the financial crisis in 2008.

Home equity hit hard by financial crisis
Some of this caution can be explained by most homeowners still having less equity than in 2007 despite the rise in housing prices. This means that many still do not have scope to increase their borrowings.