In toronto real estate, a strong housing market is making Canadians wealthier, on paper, as the value of their homes outstrips a rising amount of debt.
The average worth of liquid assets per household decreased in Vancouver, which Mr. Miron said suggests that some are cashing in their savings to make a down payment on real estate.
“The big worry on our radar at the moment is Vancouver,” Mr. Miron said. “It’s basically only real estate that’s fuelling growth in Vancouver.”
Conversely, the increase in Ontario’s net worth was spread among liquid assets, pensions and above-average real estate growth. While Toronto saw real estate growth contribute significantly to household net worth increases, households also experienced substantial gains with other assets.
Mr. Miron said there are no major indicators of volatility, but many questions regarding oil prices, the impact of B.C’s foreign buyer tax, and the possibility that the United States will raise interest rates.
Debt
Debt levels in 2015 grew at a slightly higher rate – 4.1 per cent – than in previous years, outpacing household income growth, which increased by 3.2 per cent.
However, the rising level of debt can be attributed to rising levels of mortgage debt, which increased by 5.1 per cent to $94,867. With historically low interest rates, Mr. Miron says it’s never been more affordable for Canadians to borrow.
“The big risk there is what happens if interest rates do start increasing,” he said. “Right across the board, Canadians would feel it. However, it would be concentrated in the areas which are more debt heavy, like for example Vancouver, Toronto and Calgary.”
Liquid assets
Despite a rocky year on the stock market, Canadian households on average managed to save more, with liquid assets increasing by 3 per cent to $251,559 in 2015. Investments – including bonds and segregated and mutual funds – made up a majority of those assets.
“This time around, we’re seeing Canadians being very cautious, particularly in areas related to taking on more debt,” Mr. Miron said. “At this point they are not very optimistic, which means they are being prudent, which can be considered both positive and negative.”
Pensions
Employer pension plans were the fastest-growing asset for Canadians on average in 2015.
Pension assets – predominantly within defined-benefit plans, where payouts are determined based on salary and years of service – increased 5.7 per cent nationally to $140,204. Pension assets grew the most in Manitoba – by 8.3 per cent to $142,740 – and in the Atlantic provinces, up 8.3 per cent to $138,804.
Mr. Miron said the increase appears to be tied less to new investments than to the appreciation in pension plan assets.
“With long-term interest rates continuing to decrease and Canadian longevity continually improving, it’s really forcing the defined-benefit pension plan values up,” Mr. Miron said.
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