Dropping real estate values and natural resource prices have made Canadians poorer.
According to Statistics Canada, the ‘national wealth’ of a single Canadian fell from $304,085 to $296,933 during the last three months of 2018.
This recorded drop reflects a decline of Canada’s national wealth by 2.2 per cent to $11.1 trillion at the end of the fourth quarter.
RELATED: 46% of Canadians $200 or less away from financial insolvency: poll
“This was primarily due to a 23.5 [per cent] decrease in the value of natural resources,” the agency said in a report. Weaker crude oil prices in the fourth quarter accounted for the drop. “A decline in the value of residential real estate [down $72.5 billion] also contributed to the fourth quarter decrease, as housing prices continued to edge down.”
Canadians are also borrowing more money relative to their incomes.
The household debt service ratio, which measures payments on the principal and interest of credit market debt as a proportion of household disposable income, rose 14.9 per cent in the fourth quarter, as growth in total debt payments outpaced the growth in disposable income.
RELATED: 731,000 Canadians going into debt to buy prescription drugs: UBC
Overall, the average Canadian owes $1.79 in credit market debt for every dollar that they earn towards their disposable household income.
A 2017 OCED study found that Canadians borrow far more than the rest of the world. It found Canadian household debt exceeded the total value of Canada’s per-capita Gross Domestic Product by one per cent. In other words, the Canadian economy does not produce enough wealth to cover the private household debts of Canadians, leaving one per cent unpaid if all GDP were to go towards that single item.
According to the OCED, higher-than-usual real estate prices accounted for the global debt leadership of Canadians. Worse, Canadians will find it more difficult to recover the value of their debt-fueled investment against the backdrop of declining real estate prices.
Like us on Facebook and follow us on Twitter
