We can never extol the virtues of saving too much. Deprive yourself today so that little by little you can accumulate capital that will provide returns or allow you to buy a home.
But how do Quebecers behave in this regard? Are we thrifty or spendthrifts?
Good news, the savings rate of Quebecers has been steadily increasing for around fifteen years, reaching a peak in 2023.
Better yet, Quebecers are now the Canadians who save the most among residents of the 10 provinces. They put aside 10.1% of their disposable income, almost twice the Canadian average, according to Statistics Canada data. Disposable income is income after taxes, transfers and contributions.
During the pandemic, savings rates increased across Canada, but much of that was due to government benefits.
By 2023, these pandemic effects have essentially disappeared, which allows for a better comparison of the long-term situation. And upon verification, the savings rate of Quebecers continued to climb in the first quarter of 2024, despite the economic slowdown.
So what is happening in Quebec?
First, taxes have gone down, allowing some to save more. Employment income in Quebec has also grown faster than in English Canada. It is also possible that aging is causing more Quebecers to save for their old age.
Other factors have also had an impact, notes Matthieu Arseneau, deputy chief economist at the National Bank. “It’s clear that housing costs have increased less quickly than elsewhere in Canada in recent years. The same goes for the price of energy paid by households for their homes,” he says.
Obviously, savings are more possible for wealthier households. This observation is valid for Canada as a whole, but Statistics Canada does not have data by province for savings by income quintile.
In short, the savings rate of Quebecers has increased admirably in recent years, on average, more than anywhere else in Canada. The gap is particularly evident with British Columbians.
It must be said that Quebecers, unfortunately, have a much smaller net worth than households in other large provinces. Worse: the relative net worth of Quebecers compared to that of other Canadians has been melting away for years, before recovering a little over the last 3-4 years.
On average, Quebec households had assets of $724,100 in 2023. This asset is equivalent to 74% of the average Canadian asset ($981,800).
Wealth is the net value of all assets of the members of a household, after subtracting debts. This wealth includes of course real estate (after the mortgage), but also the value of retirement pensions to be received, in addition to other savings. Note that a household has 2.2 people in Quebec, on average.
Average wealth in Quebec has increased by 50% over the past 10 years. It varies of course according to the income and age of households ($250,400 for the first income quintile and $1.96 million for the 5the quintile).
But the fact is that Quebecers’ wealth has grown less quickly than that of other Canadians. In 2010, the wealth of Quebec households represented nearly 80% of that of Ontarians. This proportion fell to 62% in 2021, before rising again to around 64% in 2023.
Similar observation, although less marked, with residents of the Prairies and British Columbia. The Atlantic region is the only one that Quebec surpasses (by 25%), and the last 3 to 5 years also mark a small rebound for Quebec.
You will have guessed that the boom in the real estate market in Ontario and British Columbia is largely responsible for the relative decline in the wealth of Quebecers compared to that of others.
In Ontario, for example, real estate now represents 50% of household net worth, compared to 44% in 2013. In comparison, this proportion has remained roughly stable in Quebec during this decade, at 34%, according to Statistics Canada data.
This weight of real estate is reflected in assets, but also in household debt. This is a hot topic in the current times, given the rather high level of interest rates.
So, British Columbians are the most indebted in Canada, as one might expect. Household debt represents 216% of their disposable income in 2023, on average, a level that has been worrying but stable for the past 10-15 years.
In Quebec, this debt rate is much lower. It represents 150% of disposable income in 2023, down from 165% in 2016.
Ontario is the province that best reflects the worrying growth in personal debt. Debt there has risen from 167% of disposable income in 2010 to 206% in 2023.
Debt is forcing many Canadians to spend more of their paycheck on monthly payments – especially mortgages – especially with rising interest rates. There comes a time when some have to hand over the keys to the bank.
Paradoxically, Canadians’ debt has also been in sharp decline over the past 10-15 years when compared with the value of their assets. This phenomenon is explained by the increase in the value of their property, of course.
In Quebec, debt is equivalent to 14.3% of the total value of household assets – including real estate and pension values, I repeat – compared to 15.5% in Ontario. In 2010, these proportions were 2.5 percentage points higher.
So there you have it, dear readers. Quebecers seem to have turned into squirrels, and that’s a good thing considering the catching up to do.