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Canadians are richer than they've ever been; thanks to rising real estate
Topic Started: 15 Sep 2017, 03:17 PM (804 Views)
Bardon
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Canada now boasts four 'cities of millionaires,' report finds

National household net worth rises to 12 per cent, according to new report, with last year's momentum carrying into 2017

A real estate sign that reads ‘For Sale’ stands in front of housing in Vaughan, a suburb in Toronto on May 24, 2017.
Canadian household spending grew at an annual pace of 4.6 per cent in 2016.

Canadians are richer than they've ever been, a new report says, and thanks to rising real estate and stock markets, the country now boasts four cities where the average household net worth is over $1-million: Vancouver, Toronto, Calgary and Victoria.

According to the annual WealthScapes report from Environics Analytics, national household net worth rose 12 per cent over last year to $770,635, while household debt grew 4.4 per cent. Canadians also increased their savings by 5.6 per cent and their investments by 13.2 per cent last year.

Last year's momentum has carried well into this year. On Friday, Statistics Canada said second-quarter gross domestic product grew at an annual pace of 4.5 per cent, propelled by vigorous consumer spending.

Household spending grew at an annual pace of 4.6 per cent. Real estate price appreciation could be one factor making Canadian homeowners particularly confident and spend-happy, according to Peter Miron, lead developer of the WealthScapes report.

"The biggest story by far this year is real estate. The growth in real estate prices has been jaw-dropping in the Golden Horseshoe area and Vancouver. Even if you step out of those major markets there is very strong real estate growth," Mr. Miron said. The report is based on 178 financial and investment statistics from January to December, 2016, from a variety of sources including the Bank of Canada, Equifax, Teranet-National Bank and Statistics Canada.

Once-quieter real estate markets in Southern Ontario were booming last year. Real estate values in Oshawa, just east of Toronto, grew by 25 per cent, with net worth in the region seeing a corresponding 17.3-per-cent jump. Net worth jumped by 15.1 per cent in Hamilton and 14.7 per cent in St. Catharines-Niagara, also markets that had home-price increases.

Largest increases in average household net worth
One-year percentage change to end of 2016, for census metropolitan areas

But the report warns the sustainability of some real estate-fuelled wealth is questionable. WealthScapes says Vancouver, Toronto and Victoria are seeing potential housing bubbles, as average real estate holdings value grew 21.8 per cent, 19.7 per cent and 19 per cent respectively. Though British Columbia implemented a 15-per-cent foreign-buyers tax last year in an attempt to cool the market and ward off speculators, Vancouver real estate prices rebounded from the impact of the tax measures, with a 5-per-cent jump in the first three months of 2017.

Ontario's housing measures, which also included a foreign-buyers tax, were not announced until April of this year, so its effects aren't reflected in the WealthScapes report.

Calgary, the fourth "millionaire" city, tells a different story – one that's not reliant on property values. Alberta was hit hard by the oil decline in 2014 but by 2016, the province's average household net worth grew 9.6 per cent to $1,039,607 and much of the increase was due to Canadian equity markets' strong performance. Liquid assets rose 15.7 per cent to $406,522 as a result.

"The thing about Alberta's households is that they tend to hold a higher amount of liquid assets. They're less risk averse than the rest of Canada," Mr. Miron said. "They've always been this way, even from before the financial crisis. They tend to have younger households," which encourages more equity ownership.

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While Alberta was the leader in asset growth, all provinces benefited from strong markets, as total assets rose 10.5 per cent nationally. The value of stock portfolios rose 17.3 per cent to $71,990 across Canada. That and the surge in savings shows that baby boomers, a generation that accounts for 27 per cent of the population, are preparing for retirement and building their nest eggs. However, Albertans were stashing away money as well, despite the population skewing younger.

"Alberta was stocking away around $10,000 per household. They were saving up for a rainy day in 2016," Mr. Miron said. "A lot of the unusual behaviour can be explained by people being concerned by their economic prospects. Will the price of oil come back?"

While assets grew nationally, so did debt. Household debt in 2016 increased to $139,387 despite income only growing 1 per cent last year, but Mr. Miron suggests this figure is also tied to real estate. Consumer debt grew 2.6 per cent while mortgage debt grew 5.6 per cent.

"A lot of this is explainable by the generations. Millennials are moving into their first homes and taking on mortgages," Mr. Miron explained.

The 69.2 per cent of Canadian households that own their homes are seeing their net worth grow at a much faster rate than the 30.8 per cent of those who don't own a home. In the wealthiest 20 per cent of neighbourhoods nationwide, household net worth grew by 14.1 per cent, while the bottom 20 per cent only had growth of 7.5 per cent. Mr. Miron suggests that this is leading to a wider wealth gap.

"When you see a boom in the real estate market or the stock market, it's more beneficial to people who are wealthier in the first place," Mr. Miron said.

Otherwise, the report and continuing developments suggest the country as whole will continue to prosper. While the nature of the economy is cyclical and real estate growth in some parts of the country is hitting unsustainable levels, Mr. Miron says there's nothing in the data pointing to a downturn any time soon.

"You usually need two or three negative impacts to see a recession but at the moment we don't even see one. I see a growing number of millionaires in the future," Mr. Miron said.

https://beta.theglobeandmail.com/report-on-business/economy/canada-now-boasts-four-cities-of-millionaires-report-finds/article36148607/?ref=http://www.theglobeandmail.com&
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Tick Tock
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My sources tell me that the Chinese investors are/have been, doing the same to Vancouver/Toronto as they've been doing to Sydney/Melbs.

Especially Condo's/Apartments. :(
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herbie
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Tick Tock
15 Sep 2017, 06:42 PM
My sources tell me that the Chinese investors are/have been, doing the same to Vancouver/Toronto as they've been doing to Sydney/Melbs.

Especially Condo's/Apartments. :(
Vancouver - "Almost 30% of the city's inhabitants are of Chinese heritage."

Source: https://en.wikipedia.org/wiki/Vancouver#Demographics
A Professional Demographer to an amateur demographer: "negative natural increase will never outweigh the positive net migration"
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Tick Tock
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Yes Herbs and even the 15% tax on these 'investors' does'nt seem to be stopping them. :?:
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Foxy
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Zero is coming...

Tick Tock
15 Sep 2017, 08:15 PM
Yes Herbs and even the 15% tax on these 'investors' does'nt seem to be stopping them. :?:
Very wise...
http://www.afr.com/content/dam/images/g/n/2/1/u/8/image.imgtype.afrArticleInline.620x0.png/1456285515560.png
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herbie
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Tick Tock
15 Sep 2017, 08:15 PM
Yes Herbs and even the 15% tax on these 'investors' does'nt seem to be stopping them. :?:
I'd be doing the same myself if I was them (and could) with their likely(?) 'collective national recollection' of their still reasonably recent history bloke:

https://en.wikipedia.org/wiki/Cultural_Revolution

Yep, I'd be looking for a 'bolthole' alright - 'Just in case' as they say.
A Professional Demographer to an amateur demographer: "negative natural increase will never outweigh the positive net migration"
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Tick Tock
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So you think they're trying to bring Communism into a Capatilist society?

Who do they think they are? :huh:
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deluded
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herbie
15 Sep 2017, 09:14 PM
I'd be doing the same myself if I was them (and could) with their likely(?) 'collective national recollection' of their still reasonably recent history bloke:

https://en.wikipedia.org/wiki/Cultural_Revolution

Yep, I'd be looking for a 'bolthole' alright - 'Just in case' as they say.
This is the reason why I don't believe that China will become the next hegemon. People happily play the capitalist game as long as they are confident that they can cash their chips in for currency of the western countries and actually purchase assets in those nations.

Can you imagine middle class Westerners clamouring to buy assets in Beijing? And actually moving there in large numbers to live?

Is it even possible?
Real Trump News -- Real Climate Science News -- Real Democrat Party News
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herbie
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Tick Tock
15 Sep 2017, 10:30 PM
So you think they're trying to bring Communism into a Capatilist society?

Who do they think they are? :huh:
I suspect they're trying to ensure they at least have a 'bolthole' (in a probably 'nice' place and at least sort of Capitalist regime) to at least possibly escape to if things shouldn't turn out quite like they might hope mid to longish term where they are now.

And that I'd be thinking the same (if I had the loot and ability to do it) should I have their still relatively recent 'collective national recollection' of their Mao's "Cultural Revolution" mate.
A Professional Demographer to an amateur demographer: "negative natural increase will never outweigh the positive net migration"
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Tick Tock
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Well maybe if they did'nt breed like f***in rabbits their would'nt be such a population/unemployment problem! ;)
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