More bad news for Canada’s housing sector.
According to data released Thursday by Statistics Canada, the collective value of Canadian homes across the country fell in 2018 for the first time in nearly 30 years.
The value of residential real estate in Canada fell a total of $30 billion in the fourth quarter of 2018 to $5.10 trillion from $5.13 trillion in the same quarter of 2017, Statistics Canada reported. That 1.4% decline represents the first decrease in country-wide home values since 1990. The decline was blamed on falling home prices in some of Canada’s priciest markets, even as debt burdens rose.
Household debt levels in Canada increased at the end of last year, with the debt to disposable income ratio reaching a record level of 174% in the fourth quarter. The record debt-to-income level resulted from a sharp slowdown in economic growth at the end of 2018.
Statistics Canada also noted that Canadians are increasingly spending a larger proportion of their income on servicing debt. The debt service ratio -- the proportion of a household's income that goes to paying off principal and interest on debt -- rose to 14.9% in the final quarter of last year, the highest level since the fourth quarter of 2007, which preceded the 2008 financial crisis.
