The Canadian household sector’s net worth fell by $443.4 billion to $11,293.9 billion in the first quarter, according to Statistics Canada.
The federal agency said the value of financial liabilities rose $14.3 billion, while financial assets fell $532 billion.
“Equity and investment funds were the main contributor to the drop in financial assets, shrinking 15.5 per cent to $2,450.0 billion, the lowest level since the third quarter of 2016. The decrease in equity and investment funds can mostly be attributed to downward revaluations (-$426.2 billion), as investors reacted to increased economic uncertainty. On the domestic side, the Toronto Stock Exchange (TSX) decreased 21.6 per cent by the end of the first quarter, including a 17.7 per cent monthly decline in March. However, the TSX showed signs of recovery after the quarter, recovering some of the lost ground in April (+10.5 per cent). As global stock markets experienced considerable losses, Canadian investors shed a record dollar amount of foreign shares from their holdings in March and saw the value of their holdings decline significantly. On a per capita basis, household net worth fell from $309,735 to $297,266,” it said.
“Currency and deposit assets increased 3.2% in the first quarter, the largest quarterly increase recorded, as households reacted to the effects of the COVID-19 pandemic. The household savings rate increased from 3.6 per cent to 6.1 per cent in the first quarter, mainly as a result of a record decrease in household spending (-2.1 per cent). The household savings rate is aggregated across all income brackets; in general, savings rates are higher for higher income brackets.
“The value of non-financial assets grew $102.9 billion in the first quarter, largely attributable to an increase of $77.4 billion in residential real estate, with strong price growth in January and February 2020 that carried through to the end of the quarter. Residential sales volumes, reflecting activity in the housing market, were 37.3 per cent higher in January and February 2020 than the same period in 2019. Meanwhile, March 2020 saw a year-over-year increase of 22.0 per cent in sales volumes relative to March 2019.”
The report said the household debt service ratio—measured as total obligated payments of principal and interest on credit market debt as a proportion of household disposable income—dropped from 14.81 per cent to 14.67 per cent, with total debt payments declining 0.6 per cent.
“Household credit market debt as a proportion of household disposable income rose from 175.6 per cent to 176.9 per cent. In other words, there was $1.77 in credit market debt for every dollar of household disposable income,” it said.
