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Is it a mistake or did Greeks become richer in 2013 without being aware of it? This is the question asked by everyone who has read the recently issued annual report of the Swiss bank Credit Suisse on global household wealth. The conclusion of the report on Greece is that in 2013 its net household wealth increased by 15%.

The impressive results have provoked the Greek edition Kathimerini to seek their grounds. The results of the journalistic investigation have led to two main conclusions. The first is that the net household wealth has increased because of the reduced number of credits and loans. The second is that 10% of the wealthiest Greeks are becoming richer, which is mainly due to the fact that the value of their property is not significantly affected by property prices. However, it is so great that it significantly increases the average value used by statistics in calculating the total wealth of a population.

How did it happen that the net financial wealth increased in a year for which the official statistics reported a 10% decrease in the gross available income, 3.9% drop in the gross domestic product and a 10.3% decline in property prices?

To answer this question Kathimerini has turned to a group of professors of economics who prepare the annual report of Credit Suisse as well as to the data used by the Greek banks and the Bank of Greece.

The answers are as follows:

1. The report indicates the values ​​of net household wealth of Greeks (value of assets minus liabilities). From 2008 to the present day the value of property, and especially of real estate, has decreased by about 35%, the decline in 2013 alone being 10.3%. The fall in lending to households however was equally large. Over the past six years, the debts for the payment of housing loans have fallen by 11% and the total liabilities to banks by 17% or 20 billion euro.

The decline in loans has increased net wealth, as demonstrated by the following example: A family with savings amounting to 20,000 euro has obtained a mortgage loan for 200,000 euro and bought a house worth 220,000 euro. In that particular year, the net wealth of the household is 20,000 euro (the value of the property 220,000 euro minus the total amount of credits, 200,000 euro). If the property value decreases by 35%, this does not mean that the net wealth of the household has decreased by 35% or 77,000 euro, because the credit has been reduced by 11% over this period. Thus, the property value has decreased to 143,000 euro and of the credit to 178,000 euro. Therefore, the decrease in the net financial wealth of the household is to the amount of 35,000 euro. That is, almost half of the decline in the property value is offset by the reduction of the loan. However, the household described in the example is in a negative position with a 35,000-euro decrease in its net financial wealth.

2. The second detail of the study is that the report is for 2013, but in practice, it compares the values ​​of the second quarters of 2013 and 2014. It notes that the economic data in Greece improved compared to the corresponding 12 months of 2012, not showing that Greeks became richer compared to the period before the crisis. It rather appears that the decline in the net financial wealth amounted to $230.6 billion compared to 2007.

3. In the period between the second quarters of 2013 and 2014 the following events occurred: A significant increase in the stock markets, and in the euro-dollar ratio in favour of the European currency. Since the report of the Swiss bank calculates wealth in US dollars in order to allow comparison of the data, the 6% rise of the euro increased the wealth of Greeks at the same rate. "This detail may seem theoretical, since Greek households receive wages and pay in euro, not in US dollars. Nevertheless, it cannot be ignored," Kathimerini comments. And this is because on the one hand, about 10 billion euro of deposits in Greek banks are in foreign currency, the majority of them being in US dollars. Moreover, Greek capital has been exported from Greece since the start of the economic crisis, about 28 billion euro of which is believed to have been put into investments, which are influenced by the US dollar ratio.

4. During this period (from the second quarter of 2013 to the second quarter of 2014) there were profits on stocks and bonds.

According to Kathimerini, the assets-liabilities ratio gives a clear picture of the net wealth of Greeks.

In the second quarter of 2014, it amounted to almost $1 trillion, including $309 billion in investments and $770 billion in real estate minus liabilities amounting to $170 billion. Here, experts add that the global values of real estate and other investments are almost equal.

In Greece, however, immovable property represents the greater part of total household wealth. This does not apply to all Greeks, but is valid for most of them. For the wealthiest Greeks (10% of the population) immovable property represents the smallest part of their total wealth. Going down to the so-called middle and lower financial class, however, the rate of participation of immovable property in the total wealth is increasing, which is why the biggest decrease in property prices and the increase in taxes during the crisis mostly affected the middle class and low-income people.

In contrast, the wealthiest Greeks derive their financial strength mainly from their companies and shares. A wealthy Greek with property worth $100 million may have real estate worth 2 million euro and pay higher taxes on it, but it still represents just 2% of his or her total wealth. Even if he or she loses the property, he or she will continue to be rich. "This happens all over the world," says a representative of the "Private Credit Department" of Credit Suisse.

Overall, those who are very rich perceive the property as a "liability", i.e. as a cost, for an expensive trip or buying a yacht, not as an "asset", that is investment.

In an average Greek household, the majority of the property is associated with real estate. In many cases and for many Greeks real estate is the only property they have. Therefore, the 35% drop in property prices and the increase in taxes combined with the reduction in income and the surge in unemployment caused the collapse of thousands of households in the crisis years.

For a middle-income Greek the picture is the following: Net financial wealth of $111,405 (compared to $96,646 in the second quarter of 2013), real estate worth $83,907, other investments to the amount of $46,604 and obligations to the amount of $19,106. Compared to the second quarter of 2013 there was a significant increase in investments in shares, bonds and other securities by about $11,000, increase in property by about $6,000 (mainly due to the expensive euro) and a small $400 increase in obligations. In fact, there was a decrease in accounts payable in euro.  

Impressive is the decline in deposits in Greek banks, namely from 184.9 billion euro at the end of 2009 to 128.1 billion euro in the first quarter of 2014. Equally impressionable is the increase of deposits of foreign nationals and companies in the Greek banks even in the crisis years. From 6.4 billion euro at the end of 2009, the deposits of foreigners exceeded 28 billion euro in the first quarter of 2014.  

At the same time, Greek citizens and companies have always put part of their capital into foreign bonds. In the first quarter of this year, Greeks (individuals and companies) held Greek bonds worth 1.2 billion euro and foreign bonds worth 6.9 billion euro. The trend of buying foreign bonds began in the year 2000 and culminated in 2006, when their value amounted to 25.8 billion euro. At that time, the total value of investments in bonds was 33.9 billion euro.

In the second quarter of 2013, the investments of Greek citizens and companies in financial products (deposits, bonds, stocks, etc.) amounted to 342.1 billion euro. A year later, they increased to 424 billion euro, which was primarily due to the increase in share values. It is worth noting that in 2013 the main index of the Athens Stock Exchange rose by 28%.