The S&P 500 Index and the S&P/TSX Composite Index both hit new highs Thursday.Brendan McDermid/Reuters
Surging stock prices are powering the bottom lines of Canadian households, more than making up for the drag from a prolonged slump in real-estate values.
The collective net worth of Canadian households – which measures the value of all assets minus all liabilities – hit a record $17.9-trillion in the second quarter, the seventh consecutive quarterly increase, according to Statistics Canada.
The gains were largely fuelled by a North American stock market rally that has shrugged off the fallout from U.S. President Donald Trump’s trade wars. The S&P 500 Index, the U.S. benchmark, and the S&P/TSX Composite Index, the Canadian benchmark, both hit fresh highs on Thursday.
In the second quarter, household financial assets expanded by $291.1-billion, a 2.7-per-cent increase from the previous quarter.
At the same time, the total value of residential real estate in Canada slipped by $3.3-billion to $8.38-trillion, largely unchanged from where it was in 2022.
However, even as households grow wealthier, “these gains are likely not evenly distributed,” Statscan said in its report, noting that households in the top one-fifth of the wealth distribution in Canada hold almost 70 per cent of financial assets, “and are therefore best positioned to benefit from investment income and valuation gains when markets perform well.”
Despite the wealth gains, the Statscan report flagged potential problems below the surface.
The Canadian household debt burden worsened as a result of sluggish income growth, with the ratio of household debt to disposable income climbing to 174.9 per cent, meaning for every dollar of disposable income, households carried $1.75 of debt.
The ratio is well below its $1.86 peak in late 2021, but marked the third consecutive quarterly increase after several years of relief.
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