The geography of Canadian family debt has a distinct west coast bias.
The west coast communities of Greater Victoria, with a debt-to-after-tax family ratio of 240, and Vancouver, with a ratio of 230, lead all Canadian Census Metropolitan Areas (CMAs).
Looking from west to east, debt levels then drop through Alberta, Saskatchewan and Manitoba before rising again in southern Ontario, with Toronto’s CMA debt ratio reaching 210. Debt levels then drop through Quebec, with Montreal ahead of Quebec City, to reach their low in Atlantic Canada, where New Brunswick’s Moncton ranks as Canada’s least indebted CMA with a ratio of 106. The national average is 165.
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So what accounts for the increases?
“Much of the increase in household debt in the post-recession period reflects the accumulation of mortgage liabilities on the household balance sheet,” the agency notes.
Higher mortgage liabilities in turn reflect higher home prices, which have risen 61 per cent in Victoria over the last five years. This figure means Victoria’s housing costs rose faster than the housing costs in Toronto, Canada’s largest CMA, where housing prices rose 58 per cent. Only Vancouver, with an increase of 68 per cent, recorded a higher spike than Victoria.
Victoria’s ratio of 240 in 2016 has doubled since 1999, when the region’s family debt level was also above the national average of 95, but not as pronounced as in 2016.
Overall, Victorians are accumulating more debt at a rate that is ‘significantly exceeding’ the rest of Canada.
The figures are not entirely discouraging. While the rising cost of housing has pushed more Canadian families into debt, their assets in the form of more valuable housing have also gone up — provided they can find somebody to purchase their homes once put up for sale.
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