Asset price inflation and the development of assets of German households

The study by the Deutsche Bundesbank "Private Households and their Finances" (PHF) documents a nominal growth of 8.1% in the assets of German households between 2010 and 2014. Asset prices measured by the Flossbach von Storch Wealth Price Index rose by 18.5% in the same period. In addition to qualitative changes, the difference in growth rates is also attributable to differences in the survey methodology, the observability of market prices for private household assets and changes in their portfolios. Conclusions about a real change in the wealth of German households cannot therefore be derived from the difference.

The latest results of the Deutsche Bundesbank's study "Private households and their finances" (PHF) show that the nominal value of assets of German households increased by 8.1% between 2010 and 2014.   The nominal balance sheet of the average German household has both expanded and changed in composition over the period. For example, the average German household's portfolio of real estate assets increased by 5.6%, business wealth increased by 21.9% and the value of equity assets increased by 27.5%.

These results are contrasted by a development in the price of wealth, which is clearly different from the observed change. In the same period, asset price inflation for the average German household is 18.5%. Real estate prices rose by 16.5%, business asset prices by as much as 50.3% and share prices by 35.0%. 

The differences between the two growth rates have different causes. The focus will be on methodological differences between the two studies. While the PHF study is based on a survey, the FvS Wealth Price Index is a pure price survey that abstracts from qualitative and quantitative changes. Stock changes such as investments and disposals, financial transfers, labour and capital income, but also the observability of market prices and differences in the underlying households of the respective years severely restrict the comparability of growth rates. Therefore, the difference between observed stock growth and price growth cannot be interpreted as a real change.

Please note: This study is available in German only.