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Canadian household wealth falls for the first time in a decade

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Canadian household wealth falls for the first time in a decade

After nearly a decade of growth, Canadian household net worth is down

New data from Environics Analytics shows the average household in Canada is less rich than they were a year ago. Called WealthScapes, the study looks at how wealthy Canadians are across the country. For a decade, that number had been going up mostly because of higher real estate price.

Now with a slowdown in the housing market when it comes to sales and prices, the net worth of Canadians has fallen as well.

The study says “After almost a decade of wealth accumulation, the average Canadian household net worth declined slightly in 2018. While the latest financial snapshot of Canadian households includes some positive trends, growing debts, shrinking pensions and a sharp drop in liquid assets are putting pressure on families.”

The analysis by Environics Analytics shows Canadian net worth fell by 1.1 per cent in 2018 compared to data gathered in 2017. The average Canadian household has $7,594 less. The average Canadian net worth is $678,792.

This happened despite Canadian households not taking on significantly more debt. Peter Miron, senior vicepresident, research and development and the architect of WealthScapes at Environics Analytics, says, “Despite being relatively prudent in terms of their debt acquisition and repayment in 2018, Canadian households felt the effects of a significant decline in equity market valuations over the fourth quarter of the year.”

But, there are pockets in Canada that did buck the trend and see their net worth increase. The city of Moncton posted the largest gains in household net worth at 2.2 per cent. The study says the New Brunswick city is not just relying on real estate prices rising to see residents’ net worth rise. “Moncton’s households were actively building their savings faster than anyone else in Canada in 2018, on average stashing, away $11,097.”

The richest households continue to be in the big urban centres. The average household net worth in the Toronto grew by 0.1 per cent in 2018 to $977,698. Environics says, this growth was due to an above-average savings rate as well as slightly above-average real estate performance in 2018.

The richest Canadians are still in Vancouver, despite their household wealth falling more than the average, by 1.3 per cent. The average Vancouver household net worth was $1.14 million.

For all of Canada, though, there are other bright spots in this report.

Miron says, “On a more positive note, Canadians are actively taking steps to reign in their debts and build up their savings. In fact, four provinces saw the average debt per household decline in 2018.” Those provinces are Alberta, Saskatchewan, Newfoundland and Nova Scotia.

Household salaries are higher as well. The average household income in Canada was up by 3.4 per cent to $99,654. Canadian household net worth falling for the first time in 10 years is not a positive story. But, depending on where you look, there are places in Canada that are doing better financially. And it’s not all because of higher real estate values, rather more because of higher salaries and better savings rates. From a personal finance perspective that is a very good news.

Rubina Ahmed-Haq is a journalist and personal finance expert. She is HPG’s Finance Editor. She regularly appears on CBC Radio and TV. She is a contributor on CTV Your Morning and Global Toronto. She has a BA from York University, received her post graduate journalism diploma from Humber College and has completed the CSC. Follow her on Twitter @alwayssavemoney.

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