23.10.2024 12:34
(Akt. 23.10.2024 14:57)
OeNB points to falling loans and rising savings rate ©APA/THEMENBILD
Austrian households are saving more money – but after taking inflation into account, the savings have been worth less every year since 2022. Financial assets reached a nominal record value of 872.1 billion euros in June 2024. Adjusted for inflation, the money was worth almost 1 percent less than the year before. Financial assets also lost real value in 2023 (minus 5.1 percent) and 2022 (minus 10 percent), data from the National Bank show.
“In any case, we are not getting any richer,” commented Johannes Turner, director of the OeNB’s statistics department, to journalists on Wednesday. It is also noticeable that in Austria, compared to the euro area, a relatively large amount of money flows into deposits, but little into retirement provision. In this country, only 15 percent of financial assets are in pension products, whereas in the euro area it is 29 percent. Retirement provision products – apart from company pension provision – have also lost some of their importance in recent years. This also has to do with the different pension systems, says Turner.
While Austrians’ consumption rose at the same rate as their nominal income last year (7.8 percent each), it only increased by 3.4 percent in the first half of 2024, even though incomes were 6.5 percent higher . Adjusted for inflation, this means that consumption remained virtually unchanged, although real incomes rose by 3.2 percent. This is likely to be reflected in a significantly higher savings rate of 11.4 percent this year. “We’re seeing people saving more,” Turner said. In 2023, 8.7 percent of income was set aside. It is questionable whether the expenditure will be caught up in the future, as the current high savings rate is still within the usual range in Austria, said Turner.
An average of 23.4 percent of consumer spending now goes towards housing; before Corona it was 21.8 percent. In return, significantly less is spent on transport, and spending on food and leisure, measured as a share of income, is back at the 2019 level.
The increased interest rates have also changed the use of available financial resources, explained Turner. Domestic households have significantly reduced their loans; most debts, including housing loans, now bear interest at a fixed interest rate. From Turner’s perspective, it is less surprising that more fixed interest rates are now in demand. Rather, one must ask oneself why variable interest rates used to be so popular in Austria. This does not necessarily indicate a high willingness to take risks; it could also be that many people were not aware of the risk of variable interest rates.
In return, more savings were made and money was shifted from daily deposits to longer-term deposits. “Only” 61 percent of the savings were available daily in June; at the beginning of 2022, before the European Central Bank (ECB) raised interest rates, it was still 70 percent.
Austrians obviously continue to be particularly happy to trust the state with their money: the revived possibility of investing money in federal treasury notes at fixed interest rates and with very little effort is being very well received. Two billion euros have flowed into federal treasuries since the instrument was restarted at the end of April. This formally turns people into securities buyers, sometimes without even knowing it, as the instrument is often perceived as a “savings book”.
In the second quarter of 2024, more than half of the funds for domestic securities flowed into federal treasuries. Given that households in Austria have well over 300 billion euros in banks, “I don’t think that will cause much panic among banks,” said Turner.
Overall, domestic households have already invested 11.7 billion euros in financial products in the first half of 2024 – more than in the whole of 2023 (10.2 billion euros). Financial assets of 872.1 billion euros were offset by liabilities of 214.2 billion euros. The debt ratio of just under 25 percent is below the average for the euro countries (around 29 percent).
