Canadian families have become wealthier over the past several years, with net worth rising despite the well-documented growth in household debt and a setback from the recession, a new Statistics Canada study shows.
In a report that takes a long view on the state of Canadian finances, the agency finds that the 2012 median net worth among family units — of two or more persons and unattached individuals — has risen 44.5 per cent since 2005 to $243,800 and up almost 80 per cent since 1999.
Those family units have also accumulated more debt, a total of $1.34 trillion in 2012, up from $864.6 billion in 2005. Most of the debt — about $1 trillion — has been used to finance home purchases. All figures are in inflation-adjusted dollars.
The Conservative government said the report shows that Liberal criticism of their policies as not benefiting Canadians generally is
“That is a very significant increase ... after-tax disposable income has increased by 10 per cent across all income bracket,” said Employment Minister Jason Kenney.
But while the overall picture of family finances was positive, the report also pointed to continuing disparities across regions, age groups and types of families.
The biggest single reason for the improvement in finances overall has been due to house prices reaching record levels, notes economist Andrew Jackson of the Broadbent Institute, and those prices are widely projected to moderate or even fall in the next few years.
Real estate prices have risen faster than mortgage debt and other assets, he notes, but if the trend reverses, some Canadian families may discover their wealth rests on “shifting sand.”
For those who owned their homes, the median reported value of the residence was $300,000, up 46.6 per cent from 2005 and 83.2 per cent from 1999.
In terms of inequality, the report found that the wealthiest 20 per cent of family units accounted for 67.4 per cent of the total national net worth, although that was slightly lower than the 69.2 per cent the top quintile possessed in 2005.
Meanwhile, the Top 40 per cent of families possessed 88.9 per cent of total net worth, leaving the bottom 60 per cent with a mere 11.1 per cent of the pie.
The lowest quintile — the poorest 20 per cent of families — had an overall negative net worth, meaning that as a group they had more debts than assets.
—By Julian Beltrame