Canadian Household Balance Sheet (2024 Q4)

Household wealth rises for the fourth consecutive quarter

• Canadian household net worth (the value of assets minus liabilities) increased by $287.7billion or 1.7% quarter-on-quarter (q/q), reaching $17.3 trillion in Q3 2024. This marks a fourth consecutive quarter of growth.
• Financial assets rose by 3.9% q/q, driven by strong equity market performance in Canada and the U.S., setting a new record high of $10.6 trillion. 
• Residential real estate values fell by 1.0% q/q, marking the fourth quarterly decline in the last five quarters. 
• Household liabilities grew at 1.2% q/q, adding $36.9 billion, as growth in mortgage and non-mortgage debt accelerated. 
• The household debt-to-income ratio declined for the sixth consecutive quarter, falling to 173.1%, as income growth continued to outpace debt growth.
• The debt service ratio (total household debt payments as a percentage of disposable income) stepped down to 14.7% from 15.0% last quarter.

Key Implications

• Canadian household wealth increased for the fourth consecutive quarter, driven by gains in financial assets. Further growth is anticipated in Q4 as North American equity markets continue to reach new record highs. An additional tailwind should come from rising home prices as consecutive 50-basis-point cuts from the Bank of Canada fuel a re-acceleration in housing activity. 
• This robust growth in household wealth is likely to bolster consumer spending into late 2024 and early 2025, supported further by high-profile events like the Eras Tour and household fiscal measures.

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