Eric Beauchesne
Sun
ASSETS I Rising home prices have continued to boost the overall wealth of Canadians this year, Statistics Canada said Friday.
Along with a drop in Canada‘s net foreign debts, that has boosted the country’s overall net worth to $4.3 trillion, or $134,400 per person, it said in its latest national balance sheet.
National net worth, which is the value of all of Canada‘s non-financial assets less what they owe foreigners, increased 2.3 per cent in the first quarter of this year from the final quarter of last year.
National wealth, which is the value of non-financial assets, such as land and buildings, rose 2.1 per cent, following a mere 0.1-per-cent increase in the final quarter of 2004.
“While investment in new residential construction slowed, the gain in value of residential real estate was supported by firmer housing prices,” it said, noting that the increase in the value of residential real estate accounted for about 40 per cent of the increase in national wealth.
Meanwhile, Canadians’ net indebtedness to non-residents declined in the first quarter — the second straight quarterly decline, it noted. Canadian assets abroad grew, helped by the depreciation of the Canadian dollar against the U.S. dollar, while Canadian liabilities to non-residents grew more modestly.
While Canadian households were spending more than they earn, resulting in the first negative savings rate in decades, their net worth continued to rise, albeit at a slower pace than in the fourth quarter.
Gains in the value of residential real estate and of stocks contributed most to the increase in the net worth of households, which were only partly offset by the increase in their liabilities, it noted.
“With sustained low interest rates, the growth in total household debt continued to outpace the growth in personal disposable income,” Statistics Canada said.
As a result, the level of debt rose to 107.3 per cent of income, up from 105.8 in the final quarter of last year.
“However, the ratio of household debt to net worth slid to 17.9 per cent in the quarter, as growth in net worth exceeded growth in debt.
Corporate balance sheets also strengthened in the quarter.
“Since 2000, corporations have generated more funds from internal operations in most quarters than they required to finance their non-financial capital acquisitions,” it noted. “As a result of this profit-driven string of surpluses, the corporate sector has been a net lender to the rest of the economy and has also used these funds to restructure their balance sheets, largely through paying down debt.”
© The Vancouver Sun 2005