New article:
The Bank of Spain has issued a warning about the diminishing capacity of young people to accumulate wealth, which may leave them vulnerable to future economic shocks. According to the Family Financial Survey released by the organization, data spanning over 20 years show a decline in household assets for individuals under the age of 35. This group has experienced a significant decrease in net wealth, dropping from 27,000 euros in 2020 to 20,000 euros in 2022, a decline of 26%.
Older age groups have seen a slight increase in net wealth, while those between 35 and 55 years old have remained stable. These findings are calculated using the median, which provides a more accurate reflection of reality and avoids distortions caused by very wealthy individuals. The data also highlights the lasting impact of the real estate bubble from the early 2000s, with average wealth in Spain not fully recovering since 2008.
Factors contributing to the decline in wealth accumulation among young people include limited access to mortgages, high housing prices, and decreasing incomes for those under 44 years old. The Bank of Spain attributes these trends to employment fluctuations and the effects of the pandemic, which have disproportionately affected younger households. Despite efforts to support income during the pandemic, younger generations continue to face challenges in building wealth compared to older age groups.
The survey reveals a generational gap in wealth inequality in Spain, with a significant decrease in homeownership among individuals under 35 years old. In contrast, older age groups maintain higher levels of wealth, partly due to inheritances and additional real estate assets. The scars of the financial crisis from 2008 to 2014 remain evident, disrupting the normal wealth accumulation patterns among different cohorts.
While debt levels have decreased, fewer young people are accessing mortgage loans and homeownership opportunities. The pandemic support measures have helped alleviate financial burdens for many households
