VANCOUVER (NEWS 1130) – After almost a decade of building wealth, the net worth of the average Canadian household dropped slightly last year.
According to a new study from Environics Analytics British Columbia is still the wealthiest province in Canada, but saw about a 1.1 per cent household drop last year, to almost $944,000.
Peter Miron, Senior Vice-President of Research and Development at Environics Analytics, says that’s about the same as the rest of the country, which has an average net worth of $679,000.
“The drop was mostly in the stock market, and Canadian equity portfolios got particularly hit,” he says. “What makes this different from previous experiences with volatile stock markets is this year, we didn’t have the cushion of growth in real estate values. This year, real estate had relatively tepid growth.”
Miron says a lot of Canadian wealth is tied up in real estate, particularly in B.C.
“The downtown core of Vancouver, North Vancouver, West Vancouver all saw rather substantial net worth declines of about two per cent to four per cent per household, whereas if you take a look at areas like Surrey, Burnaby and Richmond, they’re actually eking out net gains in 2018,” he says. “A lot of that’s having to do with real estate, but it’s also having to do with households saving money.”
The research shows Canadians are actively taking steps to reign in their debts and build up their savings. B.C. households squirreled away, on average, $6,500 last year.
“When we think about B.C., especially in Vancouver, the real estate prices are quite agitated,” Miron says. “What we’re seeing is younger households are saving a lot more money to build up that initial nest egg to buy that first house and this year, for example in Vancouver, there’s a lot of saving going on. Vancouver’s households are squirreling away almost six per cent of their incomes into their bank accounts.”
He says that’s largely out of necessity – if you can’t afford to buy a house, you aren’t investing in real estate. But he says having to save more means British Columbians are preparing for the future, and that’s a good thing. With interest rates up, pension returns were smaller.
But by and large, Canadians have been getting their debt in check and making an effort to save, even though household debt levels rose by about $3,300 last year.
“Vancouver does have a very hot real estate market that has led a lot of Vancouver households into carrying a lot of debt. So far it’s been affordable, but there’s always that risk of what happens should interest rates increase. At this point, mortgage rates appear to be going in the other direction,” Miron says.
-With files from Dean Recksiedler
Editor’s note: NEWS 1130 has updated this article to clarify the information came from a study, not a survey.