Canadian Household Balance Sheet (2024 Q4)

Household wealth rises for the fifth consecutive quarter but tariff-related market volatility signals trouble ahead

• Canadian household net worth (the value of assets minus liabilities) increased by $236.3 billion or 1.4% quarter-on-quarter (q/q), reaching $17.5 trillion in Q4 2024. This marks a fifth consecutive quarter of growth.
• Financial assets rose by 2.0% q/q, driven by strong equity market performance in Canada and the U.S.
• Residential real estate values rose by 0.6% q/q, snapping a two-quarter contraction, though still 6.2% below their 2022 peak. 
• Household liabilities grew at 1.2% q/q, adding $35.8 billion, as growth in mortgage and non-mortgage debt continued at a fast clip. 
• The household debt-to-income ratio rose for the first time in seven quarters reaching 172.8% as income growth fell short of debt accumulation.
• The debt service ratio (total household debt payments as a percentage of disposable income) eased to 14.4% from a downwardly revised 14.6% last quarter. This reflects the impact of cumulative Bank of Canada rate cuts, which are now translating into lower aggregate interest payments.

Key Implications

• Canadian household wealth continued to climb, supported by gains in financial and real estate assets. In addition, a drop in debt servicing costs gave households a bit more financial breathing room helping sustain consumer spending in the second half of 2024.
• But that momentum may have already run its course. While financial asset gains extended into early 2025, recent market turbulence triggered by tariff uncertainty has wiped out roughly 1% of the S&P TSX and 5% of the S&P 500 year-to-date. With the housing market showing little sign of strength, the only real tailwind for consumers is this week's 25 basis-point rate cut by the Bank of Canada. Adding to concerns has been recent weakening in consumer sentiment, which could put the economy on shakier ground in 2025.

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