In the second quarter of 2022, national net worth in Canada went up by 0.2%, but residential real estate slid for the first time since 2018 and pulled down with it the overall value of household wealth by $990 billion.
The second quarter figures were released via Statistics Canada’s national balance sheet and financial flow accounts on Monday. They show that the total value of all real estate in Canada declined by $446.3 billion to $8,655.6 billion during the quarter. The steep decline, which cancels out the $344 billion gain from the first quarter, was driven by the rapidly increasing interest rates.
The average resale value of a home also fell by 10.5% from the previous quarter, the statistics agency reported.
Figures for household wealth showed that non-financial assets including real estate fell by $389.8 billion, and financial assets dropped by a record $530.6 billion since the last quarter. Financial liabilities, driven by outstanding mortgage debt, went up by $69.8 billion, contributing to the overall decline in household wealth by 6.1%, the steepest quarterly drop since 1990 when the agency began tracking data.
But, households are in better shape compared to before the pandemic. Q2’s household net worth is $2.9 trillion higher than at the end of 2019.
The proportion of household credit market debt versus disposable income also went up slightly from Q1’s 179.7% to 181.7%. Household savings rate also fell from 9.5% in the first quarter to 6.2% as the cost of living outpaced income growth.
Despite significant declines in the household front, national net worth was pulled up by corporate sector net worth, which went up by $812 billion, mostly due to the rising prices of commodities.
Information for this briefing was found via Statistics Canada, and the sources and companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
