The market value of Canadian household net worth rose by 1.4% ($93 billion) to $7.0 trillion in the fourth quarter of 2012. This resulted from household assets rising 1.3% ($108 billion) with only a slight offset from liabilities increasing 0.8% ($14 billion). The gain builds on the 1.3% ($85 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 $199,700 in the quarter, up from $197,400 in the previous quarter that also represented an all-time high.
The total value of household assets rose 1.3% ($108 billion) to $8.72 trillion in Q4/12 as both financial and non-financial asset values gained in the quarter. The market value of household financial assets (which includes cash, equities, bonds and pension assets) rose 1.5% ($70 billion) led by a 2.8% ($47-billion) rise in the value of equity and investment funds as the S&P/TSX composite index edged up by 0.9% in Q4/12 to build on the solid 6.2% gain recorded in the previous quarter.
The growth in asset values and net worth was slightly greater than that of credit on a percentage basis in the quarter, resulting in a modest decrease in the household credit market debt-to-asset and net worth ratios to 19.4% and 24.2%, respectively, from 19.5% and 24.3%, respectively, in the previous quarter.
To cite RBC Economics analysts: "A slowing in credit growth is a welcome development for Canadian policymakers who have long been ringing the warning bell about the potential danger that excessive leverage poses to the financial system and, more broadly, the economy as a whole. With recent data suggesting that this moderating trend continued through the end of 2012, our expectation is that this will persist over the near-term."
