A Safe Harbor: Wealth-Income Ratios in Switzerland over the 20th Century and the Role of Housing Prices

Abstract

We estimate the ratio of private wealth to national income, βpt, for Switzerland over the period 1900-2018. Our results indicate that the development of βpt in Switzerland did not follow a U-shaped pattern as in most European countries, but that the evolution was extraordinarily stable, with βpt oscillating around 500% over most of the 20th century. However, the wealth-income ratio has been on the rise since the turn of the century to reach 721% in 2017-an unprecedented level in the past. This considerable increase is mainly driven by large capital gains in housing wealth since 2010. We present new crosscountry evidence that capital gains in housing wealth have become an important driver of rising wealth-income ratios in a series of developed economies.