The sharp rise in real estate prices across Canada last year pushed the average net worth of Canadian households to just under $1 million. This obviously historic peak conceals a very unequal distribution of wealth from one generation to the next, even if the gap has narrowed between the poorest and richest Canadian households.
Total financial wealth for all Canadian households reached $15.1 trillion ($15.1 trillion) in the third quarter of 2021, up $2.1 trillion ($2.1 trillion) from the second quarter, the most reveal. recent data on the financial health of households released by Statistics Canada last Friday. The rise in the value of real estate in the country during the summer of 2021 accounts for 59% of this increase in national financial wealth.
Since Statistics Canada counts 15.4 million households in the country, this means that, on average, the Canadian household had a net worth of $981,932 in the third quarter of last year. In theory, still according to Statistics Canada, the average Canadian household was at the end of last September $142,300 richer than at the same time a year earlier, which represents a 17% increase in one year of its net worth. . This is an increase three times greater than the pre-pandemic average quarterly increase.
Rising real estate values accounted for most of this increase, as they were responsible for 54% of the growth in average net worth in the country in the third quarter. Households that own their own home are therefore those that have seen their net worth increase more rapidly over this period.
The average household net worth also varies greatly by age group. Older households have in principle had more time to accumulate savings, to repay their debts and to acquire a property. Thus, the net worth of the baby boomer generation (55-64 years old) is $1,336,000. It drops to $491,000 for millennial households.
Quebec in slow motion
All age groups combined, the net worth of Quebec households reached $718,168 in the third quarter of 2021, up 16%. After the Maritimes, Quebec is the region of Canada where households have the lowest financial wealth. It is also one of the regions where this value obtained by subtracting liabilities (debt, mortgage, etc.) from assets (savings, investments, real estate, etc.) is experiencing the slowest growth.
By comparison, Ontario households had a net worth of $1.15 million in the third quarter last year, up 17.6% from the same period a year earlier. British Columbia households have an average net worth of 1.93 million.
It must be said that Ontario, like British Columbia for that matter, has seen its financial wealth greatly affected over the past two years by the spectacular increase in the value of its housing stock. This phenomenon was accentuated in the third quarter of last year. Real estate accounts for 48% of the net worth of Ontario households, compared to 33% of that of Quebec households. In British Columbia, real estate assets represent 53% of household net worth.
The average household net worth excluding real estate is $509,000 in Quebec, $638,000 in Ontario and “only” $601,000 in British Columbia.
Wages up, debt down
Despite regional disparities, Statistics Canada highlights a positive trend in the overall financial situation of Canadians: the least well-off households are seeing their situation improve more quickly than the others. “Since the onset of the COVID-19 pandemic, low-income households have consistently experienced stronger growth in disposable income than households in other income quintiles. This trend was also observed in the third quarter of 2021, ”notes the federal agency in its study. Thus, the disposable income of households with the lowest income increased by 17.5%, while that of households with the highest income increased by 3.9%.
While the emergency government assistance offered by the government in previous months has enabled the majority of Canadian households to reduce their debt levels at a record pace, Statistics Canada observes that the end of several restrictions, which occurred during the third quarter of 2021 in sectors where the hourly wage of workers is lower, has allowed Canadians with lower incomes to catch up a little with their fellow citizens with higher incomes.
Thanks to these gains, low-income households, on average, saw their financial situation improve a little faster than that of higher-income households. The result, according to Statistics Canada, is that the disposable income gap between the 40% of Canadian households with the lowest net worth and the 40% with the highest net worth has narrowed “to its lowest on record” since the organization has been compiling this data, since 1999.