Statistics Canada data shows that the bottom 40% of wealth holders lost out last year
The average net worth of the bottom 40% of Canadian wealth holders fell 16% in 2022, the fastest decline on record.
Statistics Canada says that young Canadians (35 and under) also saw their net worth decline (by almost 10%) more than over 45s (less than 7%) and the savings rate of households in the second income quintile more than halved compared to 2021.
Average household net worth was down 6.4% in the fourth quarter of 2022 relative to the same quarter a year earlier and for the whole of 2022 around two-thirds of the decrease in net worth for all households was due to real estate (66.1%).
However, despite the declines, net wealth and savings for Canada’s more vulnerable households remains above pre-pandemic levels.
There was also an easing of the income gap between the two lowest and two highest income quintiles, declining 0.3 percentage points year-over-year.
Those in the second income quintile increased their income by the most (3.2%) as employment earnings rose above average, but the lowest earners saw the pace of growth for their disposable income come in below average at 1.6% despite gains in average wages and salaries of 13.5%.
The highest earners’ disposable income also rose by below average at 1.4%, mainly due to lower government transfers and higher taxes and despite gains in wages and salaries (2.4%) and net investment income (9%).
Cost of living hits savings
Higher living costs have dampened net savings across all income bands but remained above pre-pandemic levels.
“For the first time since before the pandemic, middle-income earners (third quintile) returned to negative net saving in 2022, meaning that, on average, these households spent approximately $700 more than they earned in income,” the Statistics Canada report stated.
