For households, the home tends to be the main source of both wealth and indebtedness. The debts have recently been increasing: in mid-2011, overall mortgage indebtedness ran to EUR 644 billion. Offsetting this sum is over EUR 1100 billion in home property value. The average homeowner therefore enjoys a considerable net equity on his home: over 40% of the current market value.
However, the decline in house prices of recent years has reduced the debt-to-wealth ratio. In principle, this trend affects all homeowners in the same way: as the price of the home comes down, the equity is eroded. A matter for concern are the large differences in households’ starting positions. Especially the younger households tend to have only little equity, whereas many older people enjoy robust buffers (Chart 1).