Canadian household net worth (the value of assets less liabilities) gained another $42.4 billion or 0.2% quarter-on-quarter (q/q) to $17.0 trillion in the second quarter of 2024. This is slower than the previous quarter’s gain of 3.2% (or $588.9 billion), according to a report by TD Economics.
The report said financial assets rose by 0.9% q/q on the back of solid equity market gains, setting a new record high of $10.1 billion. Gains in the U.S. equity market were partially offset by losses in Canada.
The value of residential real estate edged down 0.1% q/q, as real estate activity reported the weakest second quarter in four years, it said.
Other key findings:
- Growth in household liabilities accelerated to 1.5% q/q, gaining $45.4 billion on the quarter – the largest increase since the third quarter of 2022.
- However, income growth continued outpacing the growth in debt, pushing the household debt-to-income ratio down to 175.5%. This represents the fifth consecutive quarterly decline in the ratio, putting it at its lowest level since Q1-2021.
- The debt service ratio – total household debt payments relative to personal disposable income – rose slightly to a level just shy of 15.0% and roughly in line with the peak reached exactly one year ago.
Maria Solovieva
“Despite an acceleration in liabilities growth and a decline in real estate assets, Canadian households’ wealth eked out another quarter of gains thanks to solid growth in U.S. equities and a solid contribution from savings in deposits as gains in disposable income outweighed increases in nominal consumption expenditure,” said Maria Solovieva, CFA | Economist with TD Economics.
“Looking ahead in Q3, it appears households should see further gains on the asset side of their balance sheets with equity markets on both sides of the border in the black, and house prices rising. As for liabilities, lower rates are likely to gradually reignite borrowing activity—potentially putting downward pressure on net worth— but we don’t expect a meaningful rebound in borrowing until late 2024 or early 2025. For Q3 2024, we anticipate moderate gains in household wealth, offering marginal support to consumer spending.”
Mario Toneguzzi
Mario Toneguzzi is Managing Editor of Canada’s Podcast. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He was named in 2021 as one of the Top 10 Business Journalists in the World by PR News – the only Canadian to make the list. He was also named by RETHINK to its global list of Top Retail Experts 2024.
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