Canadian Household Balance Sheet (2023 Q4)

Maria Solovieva, CFA, Economist | 416-380-1195

Date Published: March 13, 2024

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Canadian households' wealth recuperates last quarter's losses and more

  • Canadian household net worth (the value of all assets less all liabilities) finished the year on a positive note, rising by $289.8 billion or 1.8% quarter-on-quarter (q/q) to $16.4 trillion in the fourth quarter of 2023. 
  • Financial assets advanced by 5.0% q/q on the back of solid equity and bond market gains, setting a new record high of $9.7 billion. 
  • In contrast, the value of real estate declined for the second quarter in a row, registering a 1.9% loss q/q. Despite that, real estate values were 1.8% higher for the year.
  • Household liabilities expanded by 0.7% q/q. Overall, 2023 marked "the slowest accumulation of household debt in a calendar year since 1990" as households added $98.4 billion.
  • Income outpaced the tepid growth in debt, leading to a decline in the debt-to-income ratio to 178.7%. This comes after last quarter was downwardly revised to 179.2%. 
  • The debt service ratio –total household debt payments relative to personal disposable income – rose slightly to 15.0% from 14.9% in Q3.

Key Implications

  • Gains in the financial market combined with the tepid pace of growth in liabilities delivered a boost to Canadian households' wealth. Still, disparities among households remain, evidenced by January's uptick in consumer insolvencies that suggests that some families are unable to meet their financial obligations. Adjusted for inflation and population growth, real wealth per capita was only 0.1% higher for the quarter but down 1.8% relative to 2022.
  • Looking ahead, we expect another quarter of growth in household net worth. First, home prices have been moving higher in the last three months, recovering from last year's pullback as housing activity snapped back on easier financial conditions and lower mortgage rates. Likewise, equities have been marching higher, especially south of the border where pessimism about the economy recedes, giving way to a more upbeat earnings outlook. Assuming March doesn’t break the trend, we expect Q1 2024 to deliver another quarter of wealth gains, marginally supporting consumer spending.