Households had a lot more to spend in 2006

17/07/2007 15:00

According to the latest yearly figures from Statistics Netherlands, the disposable income of Dutch households rose by nearly 4 percent in 2006. In 2005 it fell by 0.6 percent. The disposable household income is corrected for price rises and changes in the health care insurance system. More jobs and better performance by the self-employed are the main reasons for the growth in 2006. As households spent slightly more than they received in income,  savings were negative again.

Household income nearly 4 percent higher

Real disposable household income rose by 3.7 percent in 2006. Household consumption was 2.7 percent higher than in the previous year. Households spent more on durable consumer goods. They also spent 6 billion euro more than they received in income. In the previous year this was 8 billion euro. Household savings were therefore negative for the fourth year in succession.

More income from labour and profits

Wages are the main source of income for households. The total wage sum rose by 3.9 percent in 2006. Half of this increase is accounted for by higher wage levels, and half by the substantial increase in the number of jobs. Self-employed businessmen and women also contributed heftily to growth in household income.

Income from capital  also showed a strong increase. Households received substantially more interest and dividend. They also paid more interest, however. Households received 7 percent more in pension payments and 2 percent more in social benefit payments such as old age pension, disablement benefit, unemployment benefit, income support and children’s allowance.

Households had to pay 6.6 percent more in taxes and premiums in 20006. For a large part, this hefty increase was the result of the health care insurance system. People who used to have private insurance now also have to pay a basic premium for the basic package set by the government.

Increase in mortgages pushes up total debt

Household were deeper in debt in 2006. The total household debt rose by 53 billion euro to 640 billion euro. Home mortgages accounted for 80 percent of this increase. The outstanding mortgage debt rose from 499 billion to 544 billion euro. This amount is even higher than the total monetary value of all goods and services produced in the Netherlands (GDP). The increase in the mortgage debt in 2006 can be explained by the increase in newly constructed homes, the continued increase in house prices, home improvement and re-mortgages.

Strong increase in financial capital of households

In spite of the increase in debts, the financial capital of households rose by 47 billion euro. They sold 6 billion euro net in shares. But the value of the shares they held rose as a result of share price increases totalling 20 billion euro. Households had 11 billion euro more in savings; this increase is slightly smaller than in the three preceding years. Lastly , the capital represented by pension and life insurance provisions rose by 67 billion euro.