For years, the wealth of Italian households has experienced substantial stagnation in value, the result of a different evolution in the two main components: housing and financial assets. Between 2011 and 2016, the value of homes, after having grown significantly in the previous ten years, going from 2.940 in 2001 to 5.688 billion euros, fell by more than 400 billion, reflecting the more than 15% drop in real estate quotations.
Financial wealth, on the other hand, fully recovered what it had lost during the first recession, approaching 4.200 billion euros in September 2017, the highest level in the last twenty years. The increase in the value of financial wealth is explained almost entirely by the recovery in quotations, while the ability to set aside new savings has considerably reduced. In the period preceding the crisis, Italian families were able to invest on average almost 120 billion euros of new resources every year; between 2011 and 2016, we dropped to just over 20.
A trend that represents an Italian peculiarity: the new wealth invested in financial assets by French families has, in fact, decreased only slightly, remaining, however, above the 90 billion average per year, while that set aside by the Germans has even increased, reaching the 180 billion. Over the last few years, the lesser ability of Italians to set aside new savings has been accompanied by a profound change in investment policies. Bank bonds and public securities were sold off sharply, becoming of little importance in household portfolios.
The search for a new balance between security and yield has, on the other hand, directed Italians towards insurance products, while maintaining, however, a high interest in deposits. Since the outbreak of the crisis, the importance of mutual funds has also grown, which, between 2012 and 2017, benefited from the inflow of almost 200 billion euros, bringing the total value of the investment to over 500 billion. Investors' attention was focused on foreign funds, which absorbed 65% of the total new resources allocated to this type of financial activity.
In comparison with Italians, German families show greater attention to security and liquidity, allocating almost 80% of their wealth to deposits and insurance and pension products. On the other hand, the importance of unlisted shares brings the French experience closer to the Italian one, although only a small part of savings is allocated to mutual funds.
More finance, less real estate in the assets of Italians
Over the last few years, the value of Italian wealth has experienced substantial stagnation, as a result of a different evolution in the two main components: housing and financial assets. The value of homes held by households had grown significantly in the run-up to the crisis, rising from €2.940 billion in 2001 to €5.375 billion in 2008. During the first recession, the increase had continued, reaching €5.688 billion in 2011, despite the number of real estate transactions had dropped drastically, from 877 in 2006 to 617 in 2010.
With the outbreak of the second recession, characterized by a sharp drop in domestic demand which had led to a further drop in real estate transactions, which fell to just over 400 in 2013, the total value of homes began to fall: in five years, more than 400 billion have been lost, falling below 5.300 billion in 2016. Despite this decline, the value of households' real estate assets remains, however, at a level almost 80% higher than that recorded at the beginning of the Two-thousand.
Financial wealth shows a different path from that of housing. The value of total assets held by households had increased by 40% in the years preceding the crisis, going from around 2.900 billion euros in 2001 to almost 4.100 in 2006. The first recession, with the sharp fall in international trade and the large of market quotations, had led to an overall loss of wealth exceeding 600 billion, falling below 3.500 in 2011. In the last six years, the improvement in conditions on the financial markets has favored a recovery in the value of assets held by Italians, returning above 4.000 billion in 2015, to then approach 4.200 in September 2017, the highest level since 1995.
The increase in the value of financial assets almost entirely compensated for the decrease in that of homes, explaining the substantial stagnation of overall wealth which, also considering other types of assets owned, such as for example non-residential property and land, was equal to 10.335 billion euros in 2016, about 100 less than the maximum reached in 2013. The different evolution experienced over the last few years has changed the distribution of household wealth between the two main components. The weight of homes, which between 2001 and 2011 had grown by more than 10 percentage points reaching 55%, decreased to around 50%, while that of financial assets, after falling below 35%, approached 40%.
The lower saving penalizes the wealth of Italians
What is happening to the wealth of Italian families is the result of different factors, which influence the different components. The valuation of real estate assets reflects the trend of the housing market. The disappointing evolution of transactions, with the weak recovery of the last four years, which brought the total number of sales back to levels approximately 40% lower than the maximum reached before the crisis, was accompanied by a sharp fall in house prices, which in the third quarter of 2011 recorded a decline of more than 2017%. The decline exceeds 15% for existing homes, while it is less extensive for new ones.
The increase in the value of financial assets, although positive, hides dynamics that deserve to be investigated. Between 2011 and 2016, the investment of Italian households grew on average each year by around 110 billion euros, more than what was recorded between 1999 and 2008. When comparing the two periods, however, profound differences emerge : in the years preceding the crisis, the increase in the value of wealth was entirely explained by the ability of Italians to set aside new savings, with almost 120 billion euros of new resources invested on average every year, while the unfavorable trend of the markets depressed the overall wealth.
Since the outbreak of the crisis, the ability of households to set aside new savings has decreased significantly: from the 120 billion on average per year in the first part of the 33s, it went down to the 2009 recorded between 2011 and 20, to then drop to just over 2012 between 2016 and 80. In the latter period, almost 100% of the increase in the value of wealth is explained by the favorable performance of the markets. A trend confirmed by the data relating to the first nine months of last year: between January and September, the value of the financial assets of Italian families increased by just over 25 billion euros, of which only XNUMX are related to new resources saved and set aside in financial assets.
These dynamics represent an Italian peculiarity. In France, the new resources invested by households in financial assets decreased only slightly. In the first part of the 110s, the flow of new investments exceeded 2008 billion euros, more than offsetting the moderately negative effect of the fall in share prices. During the first part of the crisis, between 2011 and 100, just over 150 billion were saved every year, which added up to the increases deriving from the favorable evolution of prices, causing wealth to grow on average by 2017 billion. In the last period, the flow of new resources has remained substantially stable: between January and September 100, 5 billion were set aside, bringing the total value of financial assets to over 170 trillion, 2016 more than what was recorded at the end of XNUMX .
The experience of German households is even more favourable: the average annual flow of new resources invested went from 125 billion euros in the first part of the 180s to 2012 billion between 2016 and 230. In the latter period, the value total financial assets increased on average each year by over 2017 billion, exceeding 5.900 billion in September XNUMX. The difficulties of Italians in setting aside new savings are a further representation of what has happened in recent years. With the outbreak of the crisis, households had reacted to the drop in income by reducing savings, to try to safeguard the level of consumption previously achieved. After the last recession, spending seems to have returned to follow the dynamics of income, however showing a new balance, characterized by a lower level of savings.
In the first half of the 100s, out of 12 euros of income, between 13 and 8 were saved, while today it stops at around 2000. Moving from the aggregate values to the per capita values, the distances compared to the other two main European economies still appear more evident. Between 2008 and 2, every Italian managed to invest in financial assets just over 2012 euros on average each year. Between 2016 and 400, we fell below 1.400 euros, while a Frenchman approaches 2.200 and a German exceeds 52. Undoubtedly, Italian families are still wealthy today; they are, however, less so than they were in the past. At the beginning of the 42s, every Italian held an average of almost XNUMX euros in financial assets, while the French and Germans held around XNUMX.
Before the outbreak of the crisis, the gap had widened: in Italy the per capita wealth exceeded 70 euros, while in France and Germany it reached 55 and 50 respectively. After ten years, the per capita wealth of Italians has fallen to just under 67 euros, while that of the Germans has exceeded 69 and that of the French, 72. In a context such as the current one, characterized by house prices that are still falling, or at best stable, and by an only moderate recovery of income, which penalizes the savings potential of households, the importance that the recovery in prices has in explaining the recovering the value of Italian wealth leads to paying particular attention to what is happening on the markets.
An increasingly professional management for the savings of Italians
The lower ability to set aside savings, with the sudden collapse of the flows of new resources invested in financial assets, has been accompanied in recent years by a profound change in the investment policies of Italians. What has happened since the outbreak of the crisis in the markets and in the economy as a whole has contributed to changing the needs and priorities of families. Bank bonds, which for years had been a favorite investment, have, for example, drastically lost their importance.
In the first part of the 20s, Italians invested on average more than 10 billion euros of new resources in bank bonds every year, going as far as to allocate more than 2012% of the total portfolio to them. Since the outbreak of the second recession, this instrument has, on the other hand, been subject to constant disinvestments, resulting in an overall outflow of resources exceeding 2017 billion between 270 and the third quarter of 2017. In the first nine months of 35 alone, net sales of almost €100 billion were made. Today, the value of investments in bank bonds is slightly over 380 billion, from the almost 2009 it reached in 3, with the weight on the total portfolio falling below XNUMX% in September last year.
What happened, in addition to being the representation of growing concerns about the solvency of this instrument, is also one of the effects of the changes that have affected the banks' funding policies. The value of bonds issued by financial and monetary institutions has, in fact, fallen from almost 1.000 billion in 2012 to less than 550 billion, covering only 15% of total liabilities, 10 percentage points less than initially recorded of 2012. In the last nine years, heavy sales have also affected the sector of public securities, hitting short-term and variable-rate securities with particular intensity.
Sales of BOTs and CCTs, which began in 2009, have exceeded 130 billion euros, practically disappearing from household portfolios. The sales of BTPs, although significant, were instead less intense, also recording a recovery in the first nine months of 2017, with around 20 billion euro of net purchases, which brought the portfolio value of this type of security to around 120 billion. All this has led to a drastic downsizing of the role of public securities in the investment decisions of Italians: the weight on total assets fell from almost a fifth in the mid-6s to 3% at the beginning of the crisis, and then reached 2017 % in September XNUMX.
The complexity of the scenario, with new risk and return profiles, has contributed to bringing households' attention back to managed savings, which in the decade preceding the crisis had lost importance within the assets of Italians. In the second half of the 20s, the weight of mutual funds in the portfolio had tripled, approaching 6%. Subsequently, a constant flow of disinvestments, a consequence of both the tensions that emerged on the markets and the growing attention for other types of investment, such as bank bonds, had, however, canceled out the gains, bringing the incidence on total assets back to just over XNUMX %.
Since the outbreak of the sovereign debt crisis, the growing need for professional management has shifted savings back towards mutual funds, with an inflow of new resources that in the last six years has approached 200 billion euro overall, exceeding the 500 billion of investment, more than 12% of the total. The peculiarity of this phase, however, was the growing attention to foreign mutual funds, which absorbed more than 130 billion, about 65% of the total. This process has contributed to a significant increase in Italy's portfolio investments abroad, which went from 842 billion in 2011 to almost 1.400 in September 2017, with a significant weight of mutual funds.
The search for a balance between security and yield has also directed households more and more towards insurance and pension products, while maintaining, however, a high interest in deposits, despite zero yields. In the last nine years, almost 250 billion euros of new resources have been allocated to insurance products. Of the 1.000 billion lire invested in this sector, equal to almost a quarter of total assets, only 260 were set aside in pension funds, with a weight in the portfolio stable at just over 6%. In the same period, approximately €215 billion was set aside in deposits, bringing the total balance to over €1.300 billion, approximately one third of total financial assets held.
A peculiarity that has always characterized the financial portfolio of Italian families is the importance of investments in shares, concentrated mainly in the unlisted component. Therefore, most of it concerns the participation of the entrepreneur in the capital of small and medium-sized enterprises, while the interest of savers for direct investment in listed securities appears rather limited. The total value of the shares held by Italians approached 1.000 billion euros in September last year, with a weight on the total stable at around 20%. Of these, approximately 850 relate to unlisted shares or other forms of participation in the share capital of small and medium-sized Italian enterprises.
Different composition of wealth in France and Germany German households show growing attention to security and liquidity when managing their savings. In the last six years, over 500 billion euros of new resources have been set aside in deposits, with an annual average close to 90 billion, more than double the amount recorded in the years preceding the crisis. The overall balance of deposits exceeded 2.300 billion, absorbing almost 40% of total wealth. Between 2012 and 2017, more than 450 billion were also invested in the insurance and social security sector, allocating about a third to pension funds, which reached a total investment value of 830 billion, almost 15% of the total of the wallet.
Investment in mutual funds grew, albeit less rapidly, with average annual flows of just over 20 billion, which brought the value of assets under management to around 630 billion. The weight on the total portfolio increased from 8,8% in 2012 to 10,7%, remaining, however, below the values above 12% achieved in the years preceding the crisis. On the other hand, substantial disinvestments involved both public and private bonds, with net sales which, over the last nine years as a whole, approached 120 billion, bringing the total balance from 320 billion reached in the mid-150s to little more than 3, with a weight dropped below XNUMX%.
Investment in shares appears to be of little significance, absorbing only 10% of wealth, with a greater concentration in the sector of listed securities, which in September 2017 reached a value of more than 330 billion. The financial wealth of French households, on the other hand, appears to be more concentrated in the insurance sector. In the last six years, almost 245 billion euros of new resources have been invested in this type of instrument, bringing the total value to over 2.000 billion and absorbing more than 40% of total wealth. Shares also have a significant weight, the value of which exceeded 1.100 billion, with a strong concentration in unlisted securities, representative, as in the Italian case, of the shareholding in the capital of small and medium-sized enterprises.
On the other hand, less interest is shown for mutual funds, with a total investment of just over 300 billion and a weight in the portfolio that has fallen to 6% from about 9% in the years preceding the crisis, and for bonds, both public and private, which have almost completely disappeared from the portfolio. Over the last few years, the weight of deposits has stabilized at around 30%. Between 2012 and 2017, just over 270 billion were set aside, bringing the total balance close to 1.500 billion.
