Else Beekman
When discussing economic prosperity, terms like “wealth” and “income” are often used interchangeably. However, they refer to different concepts. Income refers to the money earned over a period, while wealth encompasses accumulated assets minus liabilities. This distinction is crucial in understanding why Spaniards are wealthier than their German, French, and Italian counterparts, despite having a lower per capita GDP.
The primary reason behind Spain’s higher household wealth is its high homeownership rate. More than 75% of Spanish households own their homes, compared to only 40% in Germany. This widespread property ownership has allowed Spanish families to accumulate wealth over time as property values appreciate. In contrast, Germans, who tend to rent, do not experience the same asset appreciation.
Decline in Spanish homeownership since 2018
Though homeownership remains the norm in Spain, Fotocasa research registered a six-point drop since 2018. Age plays a key role in ownership rates: 80% of those over 55 own property, while only 10% of those under 25 do. This highlights increasing difficulties in accessing homeownership, making renting an obligation rather than a choice for many. The Fotocasa report also notes that Spain is still a nation of small-scale homeowners—80% of property owners have just one home, 16% own two, and only 4% own three or more. Among multi-property owners, second homes and rentals are the most common uses, though a significant share of properties remains vacant.
Surging real estate prices boosting household wealth
Since 2014, Spanish real estate prices have surged more than those in France, Italy, and Germany, boosting household wealth significantly. This trend mirrors Portugal’s situation, where rapid property price increases have driven up net wealth, albeit raising concerns about a potential real estate bubble.
Spain’s wealth surpasses major European economies
Recent data from the European Central Bank (ECB) shows that in mid-2024, the median net wealth of Spanish households reached €196,365, surpassing €171,000 in France, €156,000 in Italy, and €112,000 in Germany. Germany’s lower wealth ranking is due not only to its lower homeownership rates but also to conservative financial habits. German households tend to save rather than invest, preferring bank deposits over higher-yield assets like stocks. In contrast, American and British households allocate substantial portions of their wealth to equities and private pension plans, leading to higher long-term returns.
The German wealth gap
Germany’s wealth distribution is also more unequal than in other European nations. The top 10% of German households hold over 60% of the country’s wealth. Additionally, property ownership is skewed towards the wealthy, with only 26% of lower-income households owning a home, compared to a European average of 50%.
This disparity results in a median household wealth of only €20,480 for the lower 50% of Germans, compared to €72,490 in Spain, €60,530 in Italy, and €41,360 in France. Spain, in contrast, has the lowest wealth inequality among Europe’s four largest economies and has made significant strides in reducing disparities since the pandemic.
Also read: AI predicts three Spanish cities where house prices are set to rise