The Covid-19 pandemic has sent some households’ net worth soaring by more than $2 trillion since the beginning of 2020, as an increasing number of Canadians cash in on the real estate boom.
According to figures published by Statistics Canada on Friday, the net worth among Canadian households has surged by 6% to a total of $13.7 trillion in the first quarter of 2021, largely due to rising home prices. Household net worth is up 21.5% compared to year-ago levels, marking the largest jump on records dating back to 1990, and is also significantly higher than the historical average of 6.8% annual gains.
However, despite the positive figures, the data suggests that the majority of the gains in net worth were concentrated among older Canadians and homeowners. Canadians over the age of 55 accumulated $1.1 million since the beginning of 2021, while those under 35 had a net worth of $260,000. Similarly, individuals that own their home saw their net worth grow by $730 billion, while renters’ wealth only increased by a paltry $43 billion.
The imbalance also comes at a time when home ownership costs are surging to record-highs, leaving an increased number of Canadians priced out of the market. “The numbers speak to exacerbating wealth inequalities, because we also know that it is becoming even more difficult for renters to get into the housing market,” explained Desjardins Securities chief economist Jimmy Jean to Bloomberg via email. “The financial burden of owning a property is now untenable for many.”
In the meantime, the seasonally-adjusted household savings rate continues to remain in double-digit category, jumping from 11.9% to 13.1% in the first three months of the year. A rise in government transfer payments contributed to a significant portion of the increase, coupled with higher employee compensation. This has caused household disposable income to outpace consumer spending, resulting in elevated net savings among Canadian households.
Information for this briefing was found via Statistics Canada. 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.