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The net worth of households across the country increased by about C $770 billion in the first three months of 2021, a 6 per cent increase to C $13.7 trillion, Statistics Canada said in a report on June 11. This figure has increased by more than C $2 trillion since the beginning of 2020, mainly due to rising house prices.
But the data also show that the windfall mainly goes to homeowners and elderly Canadians. Homeowners accounted for almost C $730 billion of all income in the first quarter, while the wealth of renters increased by only C $43 billion. The gap is also due to rising home values, making it increasingly impossible for many Canadians to own their own homes.
Jimmy Jean, chief economist at Desjardins Securities, says the figures show rising wealth inequality as it becomes more difficult for renters to enter the housing market. For many people, the financial burden of owning a house is now unbearable.
Household net worth surged 21.5% in the first quarter from a year earlier, the biggest increase since 1990 and more than three times the historical average of 6.8% a year.
Families whose main source of income is 55 or older had a net worth of C $1.1 million at the beginning of the year, compared with C $260000 for those under the age of 35, the agency said.
The widening gap between the rich and the poor in housing may provide requirements for Prime Minister Justin Trudeau and other levels of government to address housing affordability.
Benjamin Reitzes, interest rate and macro strategist at Bank of Montreal Capital Markets (BMO Capital Markets), says policy makers need to focus on ways to increase housing supply and make it more affordable.
Statistics Canada also said in the report that the growth of financial assets has not kept pace with the growth of real estate, leading to a greater concentration of wealth in non-financial assets.
