Market volatility and economic uncertainty aside, total assets grew again in Q1
Canadians may be fearing recession ahead and feel concerned about their financial outlook, but official stats reveal that household wealth continued to increase in the first three months of 2025.
Against the backdrop of economic uncertainty and market volatility ahead of Trump’s tariffs, the net worth of Canadian households still advanced by $141 billion or 0.8% to $17.6 trillion. It was the sixth consecutive quarterly increase, although at a slower pace than the 1% of the fourth quarter of 2024.
The Statistics Canada data shows that the wealthiest 20% of households held over two-thirds of financial assets (68%) and over half of real estate (51%).
Financial assets increased by 0.9% or more than $97 billion (to $10.9 trillion) even as equity markets weakened – the S&P/TSX Composite Index grew by just 0.8% after a strong second half in 2024, while the S&P 500 Index was down 4.6% by the end of the quarter.
The value of non-financial assets rose for the second consecutive quarter to reach $9.8 trillion in the first quarter, primarily due to higher residential real estate valuations (+$47.3 billion). But the value of residential real estate increased by only 0.6% in the first quarter of 2025.
Household financial liabilities, mostly debt, increased $13.7 billion (+0.4%) in the first quarter of 2025. While borrowing slowed to $34.5 billion from $41.6 billion in the previous quarter, there was $1.74 in credit market debt for every dollar of household disposable income in the first quarter – the ratio of household credit market debt as a proportion of household disposable income increased by 174% in the first quarter as debt grew faster than income - but this was still well below the $1.79 seen at the start of 2024.
Wealth is not always reflected in cash flow or how money is used and the figures also reveal a continued weakness in the household saving rate. Seasonally adjusted, it was 5.7% in the first quarter as a 1% rise in spending outpaced a 0.8% rise in disposable income.
