Romanians’ wealth rose to more than EUR 21,000 per capita this year but remains below the pre-crisis level

The wealth of Romanian households rose to RON 98,900 (around EUR 21,200) per capita in the second quarter of this year on higher real estate prices but remains lower than the pre-crisis level, according to a financial stability report released by the central bank.

In June, the total wealth of Romanian households, including real estate assets and financial assets, was RON 1,929 billion (EUR 415 billion).

“The net wealth of the population followed the ascending trend (…), increasing by about 8 percent in the second quarter of 2018 compared to the same period of the previous year, due to the increase in real estate holdings (+9 percent), but also due to the advance of financial assets (+3 percent). Investment methods of the population highlight the need to diversify investments, as the largest share in the assets of this sector is held by deposits and cash (40 percent, June 2018),” the central bank said.

The net wealth of Romanian households are now at the highest level since 2008, when it exceeded RON 2,000 billion.

This report is similar to a recent report released by Credit Suisse – the “Global Wealth 2018” report.

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Credit Suisse analysts say Romanians adults have a total wealth of USD 659 billion (or USD 42,282 per adult) in 2018 based on national household balance sheets (HBS) or household surveys.

But by “regression estimates” using likely correlated variables, Romania’s total wealth is considered much smaller – of USD 317 billion (or USD 20,321 per adult) – a value similar to Romanian central bank’s calculations.

But there are huge differences between Romanians regarding wealth, according to the Credit Suisee study. 62 percent of Romanian adults own less than USD 10,000 in assets (financial or non-financial), while 35.4 percent own between USD 10,000 and USD 100,000, and 2.5 percent between USD 100,000 and USD 1 million.

Only 0.1 percent of Romanians are wealthy enough to own assets of more than USD 1 million, according to Credit Suisse.

Considering the wealth of its people, Romania has a similar situation with Mexico (65.7 percent have less than USD 10,000 in assets, 0.1 percent are millionaires) and South Africa (63.7 percent less than USD 10,000, 0.1 percent more than USD 1 million).

According to Romanian central bank, default risk for households is on a rising trend.

“Default risk for loans to the private sector remains high, for households in particular, and is envisaged to intensify over the period ahead. (…) The one-year probability of default for households is estimated to rise in the next 12 months for both housing loans (+0.35 percentage points) and consumer credit (+0.85 percentage points),” the report indicates.