Distributions of household economic accounts for wealth of Canadian households, fourth quarter 2020

Released: 2021-09-07

This release of the Distributions of household economic accounts provides new information up to the fourth quarter of 2020 and introduces new distributions by household wealth (net worth) quintile, which grouping households from everyman to highest wealth based on the full of their avails less liabilities.

While the results released today provide important insights on the boilerplate trends in the distributions of wealth for households with specific socioeconomic characteristics, it is important to recognize that not all households, even those with similar characteristics, necessarily feel the same situations.

Despite the incertitude and volatility that the pandemic has caused in people'south everyday lives, on average all households in Canada increased their wealth in 2020. The household wealth gap declined in 2020, as net worth for the lowest two wealth quintiles increased at a faster pace than the wealthiest 20%.

To the lowest degree wealthy increment share of net worth as debt declines

Household wealth reached $12.9 trillion in the fourth quarter of 2020, upwards $1.2 trillion (+10.5%) from the cease of 2019. While the wealthiest households (top twenty%) held more than two-thirds (67.5%) of all internet worth in Canada, those in the lowest 2 wealth quintiles—who accounted for 40% of all householddue south—held ii.v% in the fourth quarter of 2020.

Although the value of avails owned by households in the everyman ii wealth quintiles was relatively pocket-sized, property an average of $41,400 in financial assets and $84,200 in real manor at the end of 2020, their average wealth grew faster than other households in 2020—increasing at a rate of 23.5% in the lowest ii wealth quintiles over the previous year, compared with an increase of 8.9% for the highest wealth quintile. Households in the lowest two quintiles were the only group that reduced their average debt from 2019 to 2020. Decreases in debt for the lowest two wealth quintiles occurred for both mortgage debt (-1.1%) and not-mortgage debt (-6.2%). Meanwhile, wealthier households increased their mortgage debt in 2020 to buy real estate, specially those in the 3rd (+nine.4%) and fourth (+9.3%) wealth quintiles.

Nautical chart one Chart 1: Change in net worth by wealth quintile, including contribution of each wealth component, fourth quarter of 2020 relative to fourth quarter of 2019
Change in cyberspace worth by wealth quintile, including contribution of each wealth component, fourth quarter of 2020 relative to fourth quarter of 2019

Chart 1: Change in net worth by wealth quintile, including contribution of each wealth component, fourth quarter of 2020 relative to fourth quarter of 2019

Gap in internet worth by wealth quintile greater and more persistent than by income quintile

Household net worth can too be grouped past disposable income quintile, which offers a different perspective on the distribution of wealth. Households with college income have a greater share of net worth relative to their population share, all the same the gap in net worth between the highest and lowest wealth quintiles is greater than the gap in income quintiles. The wealthiest households deemed for 67.5% of household internet worth, down 1 percentage point from 2010, while the highest income households accounted for 45.4% of household cyberspace worth, down five pct points from 2010.

Chart ii Chart 2: Share of net worth distributed by disposable income quintile and wealth quintile, fourth quarter of 2020
Share of net worth distributed by disposable income quintile and wealth quintile, quaternary quarter of 2020

Chart 2: Share of net worth distributed by disposable income quintile and wealth quintile, fourth quarter of 2020

As assets accumulate and debts are repaid over time, household wealth increases, particularly for those households with a middle-age income earner. Households in the 55-64 age group held the highest average net worth at the end of 2020, at near $1.iii million, upwardly vii.9% from 2019.

Middle age households in lower income quintiles proceeds the most wealth in 2020

Wealth grew more for households in the lowest (+xix.6%) and 2d (+23.6%) income quintiles in 2020, equally college-than-average gains in real manor values outpaced their mortgage debt acquisitions. Gains in wealth in the lowest income quintile were concentrated in middle-age households, as the boilerplate value of real estate holdings for youth and seniors was relatively lower.

Chart three Chart 3: Quarterly change in average net worth by disposable income quintile and age of major income earner, indexed to fourth quarter of 2019
Quarterly modify in average net worth by disposable income quintile and age of major income earner, indexed to fourth quarter of 2019

Chart 3: Quarterly change in average net worth by disposable income quintile and age of major income earner, indexed to fourth quarter of 2019

Highest income earners come across a decrease in their share of wealth from 2010 to 2020, except in Ontario

Wealth for households in the highest income quintile was 2.3 times college than the overall average for the fourth quarter of 2020. The top 20% of income earners had an average net worth of virtually $ane.9 one thousand thousand per household, compared with most $292,000 for the lesser 20%.

Trends in the distribution of wealth by income quintile vary by region. While households in the top national quintile across virtually provinces decreased their share of wealth over timeast—reflecting in office a larger number of households earning lower incomes—those in Ontario increased their share of wealth from 20.4% in 2010 to 21.5% in 2020. Increases in net worth for the highest income households in Ontario occurred forth with a larger number of households earning higher incomes, coupled with higher-than average increases in real estate that outweighed increases in mortgage debt. Non even households in the highest income quintile in Ontario were allowed to the economical furnishings related to the COVID-one9 pandemic, however, as their share of wealth decreased from 22.three% in 2019 to 21.5% at the end of 2020.

Chart 4 Chart 4: Share of wealth for top 20% of income earners by province or region, fourth quarters of 2010, 2019, and 2020
Share of wealth for summit twenty% of income earners by province or region, fourth quarters of 2010, 2019, and 2020

Chart 4: Share of wealth for top 20% of income earners by province or region, fourth quarters of 2010, 2019, and 2020

Debt-to-income ratios increment near for the heart-aged in higher income quintiles

Income earners in the lowest income quintile had the highest debt-to-income ratio by quintile in 2020, at 274.8%, although their ratio has decreased by 23 percentage points since 2010 equally their income grew faster than their debt. The lowest income quintile increased debt at a slower pace than higher-income households, due in role to rising home prices and tightening mortgage qualification rules that may have squeezed out first-time homebuyers.

Conversely, while higher income earners have the lowest debt-to-income ratio, they have increased over fourth dimension. The debt-to-income ratio for those in the fourth income quintile reached 175.3% in 2020, upwardly 4 percentage points from 2010, while the ratio for the highest income quintile was 133.9%, up 6 pct points over the aforementioned catamenia.

The increment in the debt-to-income ratio for households in the highest income quintile was largest for those with a major income earner aged 45 to 54 years, as they bought homes and increased their debt at a faster-than average pace. While the debt-to-income ratio for centre-aged households in the highest income quintile reached 195.iv% in 2019, upwardly 61 percentage points from 2010, their ratio fell to 176.6% in the fourth quarter of 2020 as the increase in boilerplate debt holdings did non keep pace with the increment in boilerplate disposable income during the pandemic.

Nautical chart 5 Chart 5: Debt-to-income ratio for top 20% of income earners by age group, fourth quarters of 2010, 2019 and 2020
Debt-to-income ratio for meridian 20% of income earners by age group, 4th quarters of 2010, 2019 and 2020

Chart 5: Debt-to-income ratio for top 20% of income earners by age group, fourth quarters of 2010, 2019 and 2020

  Note to readers

Statistics Canada regularly publishes macroeconomic indicators on household wealth (net worth) as part of the Canadian System of Macroeconomic Accounts (CSMA). These accounts are aligned with the nearly recent international standards and are compiled for all sectors of the economy, including households, non-profit institutions, governments and corporations along with Canada'south financial position vis-à-vis the rest of the world. While the CSMA provide high quality information on the overall position of households relative to other economic sectors, the Distributions of household economical accounts (DHEA) provide boosted granularity to address questions such as vulnerabilities of specific groups and the resulting implications for economic well-being and fiscal stability, and are an of import complement to standard quarterly outputs related to the economic system.

The DHEA estimates released today provide estimates of wealth and their sub-components by various household distributions for 2020. Annual estimates for 2010 to 2019 have been revised to include updated household counts, the CSMA benchmarks as of June 1, 2021, as well as new microdata used for estimating household distributions (2019 Survey of Financial Security and the Social Policy Simulation Database and Model 28.1). Estimates for wealth distributed by wealth quintile are combined for households in the everyman two quintiles for ease of analogy, since the average household in the lowest wealth quintile owed more in liabilities than it owned in avails, such every bit self-employed workers with negative cyberspace business equity and recent graduates with pupil loan balances.

Forth with annual estimates, the release today includes revised quarterly estimates for the period from the get-go quarter of 2020 to the fourth quarter of 2020. The inclusion of new microdata, household counts and CSMA benchmarks impacted the revisions to the quarterly DHEA. Additionally, the quarterly DHEA released today differ from previously published experimental sub-annual estimates in that we are no longer holding constant the 2019 demographic and socioeconomic conditions. Instead we used the same approach as with the annual DHEA, assuasive households to change distributional groupings from one quarter to another. This change has resulted in slight unlike estimates from the experimental sub-annual estimates released earlier this year, but overall the main trends are similar.

As with all data, the DHEA estimates are not without their limitations. While some distributions are estimated using timely microdata, such as household liabilities, others, including household avails, rely on assumptions or apply data from prior reference periods. Users should keep these limitations in mind when analyzing the estimates included in this release.

All values are expressed in quarterly nominal unadjusted rates, unless otherwise specified.

Products

The data visualization product "Distributions of Household Economic Accounts, Wealth: Interactive tool," which is function of Statistics Canada – Data Visualization Products (Catalogue number71-607-Ten), is now available.

The document, "Distributions of Household Economic Accounts, estimates of asset, liability and net worth distributions, 2010 to 2020, technical methodology and quality report," which is part of the Income and Expenditure Accounts Technical Series (Catalogue number13-604-Yard), is now available.

The Economic accounts statistics portal, accessible from the Subjects module of our website, features an upwardly-to-date portrait of national and provincial economies and their structure.

The Methodological Guide: Canadian System of Macroeconomic Accounts (Catalogue number13-607-X), is at present available. See the section "Distributions of Household Economical Accounts."

The publication Latest Developments in the Canadian Economic Accounts (Catalogue number13-605-10) is bachelor.

The User Guide: Canadian System of Macroeconomic Accounts (Catalogue numberthirteen-606-Chiliad) is available.

Contact information

For more than data, or to inquire about the concepts, methods or data quality of this release, contact us (toll-costless 1-800-263-1136; 514-283-8300; STATCAN.infostats-infostats.STATCAN@canada.ca) or Media Relations (613-951-4636; STATCAN.mediahotline-ligneinfomedias.STATCAN@canada.ca).

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