Wealth rises $287 billion but the gap between the richest and poorest continues to widen
Statistics Canada reported that Canadian households' net worth increased by $287.7bn, or 1.7 percent, to reach $17.28tn in the third quarter of 2024.
This marks the seventh increase in eight quarters, during which household wealth rose by nearly $1.9tn. Average household net worth held steady at over $1m.
However, wealth distribution remains unequal. The wealth gap between the top 20 percent and the bottom 40 percent of households widened to 64.9 percentage points in the second quarter of 2024, up 0.4 percentage points from the same period in 2023.
Households' financial assets rose by 3.9 percent, an increase of $400bn, to a record $10.63tn, driven by a 9.7 percent rebound in the S&P/TSX Composite Index.
This outperformed the S&P 500 Index, which gained 5.5 percent. Households with domestic or foreign equities, including through funds, benefited from higher valuations.
However, the top 20 percent of wealth holders-controlled 71.6 percent of financial assets in the second quarter, potentially increasing wealth disparities.
Conversely, non-financial assets declined by 0.8 percent, or $75.4bn, to $9.69tn, driven by an $88.1bn decrease in residential real estate values. Meanwhile, financial liabilities, including mortgage and non-mortgage debt, increased by $36.9bn, representing a 1.2 percent rise.
The household saving rate climbed to 7.1 percent, a three-year high, as disposable income rose 2.3 percent, outpacing consumption growth of 1.2 percent. Investment in mutual funds surged to $26.9bn, the highest since early 2022 and up from $14.7bn in the second quarter.
This marked the fourth consecutive quarter of mutual fund inflows, totalling $66.3bn since late 2023.
Deposits slowed, with households adding $7.7bn in cash and deposit assets, the smallest increase since early 2021. Residential real estate holdings declined 1 percent to $8.30tn, with home prices falling 5.2 percent to approximately $667,000.
Despite two consecutive quarters of declining home values, real estate remained a significant asset, representing 40.9 percent of households' total assets.
Credit market borrowing rose to $30.1bn, up from $24.7bn in the previous quarter. Mortgage borrowing increased to $21.4bn, the highest level since 2022, while overall credit market debt rose 1 percent to $2.99tn.
The ratio of credit market debt to disposable income fell for the sixth consecutive quarter to 173.1 percent. This reflects $1.73 in debt for every dollar of disposable income, down 11 percentage points from the first quarter of 2023.
The debt service ratio also eased, dropping to 14.72 percent from 14.98 percent in the second quarter, as income growth (+2 percent) outpaced debt payment increases (+0.2 percent).
National net worth fell 0.7 percent to $18.95tn, as non-financial assets such as residential real estate and natural resources declined in value.
Canada’s international investment position increased for the fourth consecutive quarter, rising $11.6bn to $1.86tn, which partially offset the overall decline.
Private non-financial corporations borrowed $35.6bn in the third quarter, primarily through net bond issuances (+$20.2bn) and non-mortgage loans (+$11.4bn).
Credit market debt for private non-financial corporations reached $2.18tn while their interest expense rate climbed to 4.16 percent.
The federal government’s demand for funds rose to $25.4bn, driven by bond issuances (+$24.9bn). Non-residents led the demand, purchasing $19.5bn in bonds while redeeming $4.5bn in treasury bills.
Statistics Canada reported that the federal government's net liabilities as a percentage of GDP decreased to 32.4 percent, driven by assets growing at a faster rate than liabilities.
