Household wealth is falling rapidly

According to the latest data from the Central Bank of Luxembourg, the average net household wealth in 2023 stood at €1.157 million. Despite this impressive figure, when adjusted for inflation, this figure represents an 18% decline compared with the previous period. Economists attribute this negative trend primarily to a correction in property prices and a fall in the value of stock market assets, which has directly affected the wealthier sections of the population.

The process of capital accumulation is complicated by the declining affordability of housing. The proportion of households owning their own home fell to 61.7% in 2023, down from 65.6% in 2021. By way of comparison, in 2018, almost 70% of residents were homeowners. At the same time, 32% of households still own additional property alongside their main residence. Meanwhile, car ownership remains widespread: 84.2% of families own at least one vehicle, although a slight decline in interest is also evident here.

Against a backdrop of falling asset values, household incomes, by contrast, showed an increase. Average gross income stood at €125,000 per year, whilst the median was €96,600, which is 8% higher than in 2021. The bank’s experts attribute this to the effectiveness of the wage indexation system, which covers 79% of the country’s households. Nevertheless, levels of prosperity remain strongly correlated with social status: tenants remain significantly poorer than homeowners, and married couples accumulate more wealth than single or divorced citizens.

Despite macroeconomic fluctuations, the distribution of wealth in Luxembourg has remained consistently unequal since 2010. The top 1% of households account for 13% of the country’s total net wealth, whilst the top 10% of households control almost half of all assets – 47%. In contrast, the bottom 50% of the population collectively own just 9% of the nation’s wealth. A worrying sign remains the existence of a group comprising 2% of households with ‘negative equity’, whose debts exceed the total value of their assets.