Canadian household wealth has increased, debt is stable

Canada’s national wealth also higher as foreign assets gain

Canadian household wealth has increased, debt is stable
Steve Randall

There was an increase in Canada’s national wealth in the third quarter of 2018.

Statistics Canada says that the value of non-financial assets in the economy grew 1.6% to $11,415.3 billion, although this was a slower pace than the 1.9% of the previous quarter.

The value of natural resources was the largest influence on the increase, which means national wealth totals $306,584 on a per capita basis.

The performance of foreign stock markets relative to Canada’s pushed the net foreign asset position up by $116.1bn to $647.9bn; this was moderated by appreciation of the Canadian dollar against all foreign currencies.

National net worth, the sum of national wealth and Canada's net foreign asset position, increased 2.5% to $12,063.2 billion at the end of the third quarter.

Household wealth gains
The net worth of Canadian households edged up 0.4% in the third quarter to $11,110.2 billion and the debt-to-asset ratio was 16.7% as growth in assets continued to outpace growth in liabilities.

A decline in the value of residential real estate (down $19.5bn) was largely offset by a rise in the value of consumer durables and inventories meaning the value of non-financial assets in the household sector was relative unchanged from Q2 at $6,274.0bn.

Financial assets rose 0.9% in the third quarter, led by increases in the value of equity and investment funds (+$33.2 billion). Strong foreign equity markets contributed to the gains.

Household debt ticks higher
There was a slight increase in household debt as a share of household disposable income – 177.5% in Q3 compared 177.4% in Q2. That means $1.78 in credit market debt for every $1 of household disposable income. This includes mortgages.

The household debt service ratio reached 14.5% in the third quarter, relatively unchanged from the previous quarter.