Canadian wealth leaning on real estate

The plunge in oil prices  has weighed on Canadian overall national net worth (assets less liabilities), which fell 1.3%, or $129.4 billion - mostly due to a massive $285 billion decline in natural resource wealth. The decline in energy prices was partially offset by continued gains in real estate wealth ($48.7 billion) and an improvement in Canada's international financial position (+$61 billion). Excluding the resource sector, net worth advanced 1.7%.

Low oil prices weighed on household financial assets (through equity prices) in the quarter, but the weakness was largely offset by residential real estate gains. While household debt (+1.3% quarter-over-quarter) continued to grow a moderate pace, a slowing in both household income and asset growth pushed the credit market debt-to-income ratio up to a new high of 163.7% and the debt-to-asset ratio up to 17.0%. The debt-to-asset ratio is still below the 19% peak reached in 2009. Overall household net worth edged up 0.4% in the quarter and was flat on a per capita basis.

The federal government borrowed an additional $17.8 billion in the third quarter, pushing it back into a net borrower position. The federal government's net debt rose to 30.8% of GDP, up from 30.7% in the prior quarter. Provincial governments continued to push further into net borrowing position and the debt of all provincial governments combined rose to 28.1% of GDP in the quarter.

Weak economic growth, equity markets and resource wealth weighed heavily on the balance sheets of both financial and non-financial businesses. Assets held by financial corporations fell by 1% in the third quarter, while still up on a year-over-year basis. Meanwhile, assets for non-financial corporations were down 2.9% in the quarter and 1.5% from year ago levels. The credit market debt-to-equity ratio of non-financial corporations rose to 67% in the quarter and has been on a sharp upward trend since 2012.