The market value of Canadian household net worth rose by 1.9% ($134 billion) to $7.2 trillion in the first quarter of 2013. The gain builds off the 1.4% (or $107-billion) increase seen in the previous quarter and pushes the aggregate wealth of Canadian households to its highest level on record. Per capita net worth was $204,800 in the quarter, up from $201,400 in the previous quarter and also represents an all-time high.
The total value of household assets rose 1.6% ($140 billion) to $8.9 trillion in Q1/13 as both financial and nonfinancial asset values gained in the quarter. The market value of household financial assets (which include cash, equities, bonds and pension assets) rose 2.3% ($109 billion) led by a 3.4% ($58-billion) rise in the value of equity and investment fund shares as the S&P/TSX composite index rose by 2.5% in Q1/13 to build on gains of 0.9% and 6.2% in Q4/12 and Q3, respectively.
Non-financial assets rose a more modest 0.8% ($31 billion) from their Q4/12 levels as the combination of ongoing housing market activity and modestly rising home prices supported a 0.9% ($33 billion) increase in the value of total real estate assets in the quarter (real estate accounts for just under 90% of household non-financial assets).
With respect to household financial obligations, total liabilities grew by 0.4% ($7 billion) to $1.7 trillion in Q1/13. The growth in credit market debt outstanding (which includes mortgages, consumer credit and loans) drove the quarterly increase, up 0.3% ($6 billion) in the quarter. The expansion of credit balances was led by a $4-billion (0.4%) increase in mortgage debt while consumer credit & other non-mortgage loans outstanding expanded by $2 billion or 0.3%.
"The improvement in the indicators of Canadians’ financial position," to quote experts at RBC Economics, "are likely to please policymakers and help to alleviate the concerns over the risks excessive household indebtedness pose for the financial system. Accordingly, the pressure on the Bank of Canada to counteract these risks by tightening monetary policy is easing.
"With price pressures remaining limited," the bank concludes, "we expect that the central bank will keep financial conditions accommodative through the remainder of this year and into next in an effort to support a faster pace of expansion in the Canadian economy."
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