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Canadians’ net worth hits new high

Canadians’ household net worth hit a record high in the fourth quarter of 2012, driven by higher home prices and stabilizing debt loads, which economists say is a sign of “financial maturing.”

The market value of Canadian household net worth rose by 1.4 per cent or $93 billion to $7 trillion, according to an RBC Economics analysis of the latest Statistics Canada data released Friday.

“This represents the highest level of aggregate net worth on record,” said RBC economist Laura Cooper.

Cooper noted the gain in net worth reflected the $108 billion increase in household assets values (rising to $8.7 trillion), partially offset by the $14 billion increase (to $1.7 trillion) in household liabilities.

Per capita household net worth was $199,700 in the quarter, which was up from $197,400 in the previous quarter, also an all-time high, Cooper said.

While Canadians’ debt-to-income ratio stayed at a record 165 per cent in the fourth quarter, and household debt grew by 5.5 per cent in the October-to-December period, it was the slowest pace recorded since 2002.

“House prices didn’t fall, financial markets went up and borrowing is slowing. It shows some financial maturing by many Canadians,” said Benjamin Tal, Deputy Chief Economist of CIBC World Markets Inc.

The level of household debt remains a concern in Canada, but TD economist Jonathan Bendiner noted growth has moderated over the last few quarters, which he noted is "encouraging and underscores the Bank of Canada's view that households are exercising more restraint.”

Overall national net worth – which includes households, government and investments – increased by 1 per cent to $6.9 trillion in the fourth quarter, to reach $195,900 on a per capita basis, StatsCan also said on Friday.

“Higher prices for many assets led the advance,” StatsCan said in its report. “The decrease in Canada's net foreign indebtedness also contributed to the gains in national net worth.”

The corporate sector led the savings trend, a trend Bank of Canada Governor Mark Carney has previously referred to as “dead money” as companies worry about investing in today’s volatile economy.

“The Canadian economy is looking to the corporate sector to be a pillar of strength in 2013 and use their healthy balance sheet position to increase spending on investment and hiring,” Bendiner said.