Savings Index falls to its lowest level in almost two years, as younger people squeezed by rising property prices

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Key Highlights:

  • The overall savings index fell to 103 points in June, its lowest reading since October 2014
  • Drop led by younger people who feel they can save “nowhere near enough’’, amid rising property and rental prices

The Nationwide UK (Ireland) Savings Index, which measures overall consumer sentiment towards saving, fell to its lowest level in June in almost two years, led by younger people who said they could save “nowhere near enough” amid rising home and rental prices. The index fell to 103 points from 119 points in May, bringing it to its lowest reading since October 2014.

The fall in sentiment was led by a sharp decrease in the proportion of people who felt good about the amount they can save. The savings attitude index, which asks respondents about their saving behaviour and how they feel about the amount they can save, dropped to 103 points in June from 130 in May. Almost a third (31.3 percent) of those aged under 50 said they could save “nowhere near enough.” This represents the highest reading in the index since December 2013.

There was also a rise in the level of over 50s who felt they couldn’t save enough. The percentage of that age group who felt they were saving about what they should be, fell from 5.1 per cent to 2.5 percent. Overall the proportion of people who said they saved regularly fell to 39.1 per cent in June from 43.3 per cent the prior month.

Commenting on the survey’s findings, Brendan Synnott, Managing Director of Nationwide UK (Ireland), said:

“In June the trend of higher home prices and higher rental prices continued across Ireland, with average rental prices surpassing their 2007 peak. Combined with historically low interest rates it is not surprising that consumers in Ireland are feeling more negative in their view of saving than they have done.

“The impact of higher property prices, both in terms of renting and buying, falls more upon those in the under 50 age group as they tend to be more likely to be trying to get on the property ladder, trading up or indeed renting. It’s therefore not surprising that we’ve seen a spike in the under 50s who feel they can save nowhere near enough.

“It’s also likely that Brexit concerns were a factor in people’s thinking as it created uncertainty as to how a UK vote to exit the EU would impact on the Irish economy.”

The share of respondents who said they would use any surplus money to pay off debts, including their mortgage, rose slightly in June to 40.9 per cent from 40.3 per cent the previous month. Some 12.1 per cent of respondents indicated they would spend the surplus money, up from 10.3 per cent in May, while 9.8 per cent said they would invest it. The proportion of respondents who said they would save surplus money, over and above their everyday needs, fell in June to 37.2 per cent from 38.7 per cent in May.

Savings Index data

Data from Savings Index July 2016

About the Savings Index

The Savings Index is constructed from monthly research on the attitudes of Irish consumers towards saving.

The Index measures peoples’ responses to questions on their attitudes and behaviour towards saving (The Savings Attitude Index) and conditions in the wider environment (Savings Environment Index).

The Nationwide UK (Ireland) Savings Index is produced monthly from a minimum sample of 800 consumers over 15 years of age. The ESRI carries out the Savings Index research to ensure the indices represent a national sample.

Note: Prior to January 2011 the Nationwide (UK) Ireland Savings Index was constructed using quarter one, 2010 as its base period. From January 2011, The Index has been rebased using the year 2010 as the base period. The method for calculating the savings attitudes sub-index has been altered to reduce short-term volatility as the impact of small changes in the number of responses was being overstated when the number of respondents in a category was low.

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