Household Wealth Declines

Canadian households experienced a decline of almost C$1 trillion ($775 billion) in net worth in the second quarter amid plunging prices for homes and stocks, says Statistics Canada. The value of residential real estate holdings held by households fell by C$419 billion in the three months between April and June, while financial assets dropped by C$531 billion. In total, household net worth fell 6.1 per cent, or C$990 billion, the largest drop on record. The numbers illustrate the extent to which higher global interest rates are destroying household wealth in Canada, adding a major headwind to the nation’s slowing economy. The average resale price of a home dropped by 10.5 per cent from the first quarter, the statistics agency says. That drag on net worth from housing is likely to persist into the second half of this year, with Canadian home prices still falling and borrowing costs expected to rise further. Still, households remain much better off than they did before the pandemic, with net worth C$2.9 trillion higher than at the end of 2019. The value of residential real estate held by households is up C$2.3 trillion over that time.