ESG Final

Counter to public perception, wealth inequality has narrowed slightly in Canada. Between 2005 and 2019, the share of wealth held by the top 1% and 10% both fell. Some ground was gained by middle and low-wealth households.

This chart shows Canadian household net worth percentiles' share of national wealth for 2005 and 2019. The top 10%'s share falls by over two percentage points from 50.4% to 47.8% while the bottom 50%'s share increases by almost one percentage point from 5.4% to 6.3%.

Real estate values have not contributed to a widening in wealth inequality. If anything, rising homeownership among the lowest wealth Canadians has helped to lean against it. To top it off, those driving the increase in homeownership at the bottom are young Canadians between the ages of 25 and 34 – the demographic that the public discourse would suggest is being priced out.

This chart shows Canadian homeownership by net worth percentile for the years 2005, 2012, 2016 and 2019. The homeownership rate among those in the bottom 30% rises by 3 percentage points between 2005 and 2019 as opposed to an average 1 percentage point decrease in every other percentile group (30-70%, 70-90%, 90-99% and the top 1%).

But, dig deeper and the story gets more complicated. These young households have higher incomes than the average low-wealth household, with many also benefiting from parental wealth transfers. Despite these advantages, the deterioration in affordability is resulting in higher leverage. This is the reason these households are bumped into the “low wealth” category.

With affordability now at its worst level in decades, the current generation of prospective homebuyers is facing the fate of missing out on housing wealth. Households without a starting point of a high income and/or an intergenerational wealth transfer face a high barrier into homeownership.

Wealth inequality in Canada is not just a story of rich versus poor, it is one of homeowners versus non-homeowners. The average net worth of homeowners born between 1955 and 1964 is now more than $1.4 million. This is 6.3 times that of non-homeowners born during the same time.

This chart shows average net worth growth of households with major income earners born 1955-64 by homeownership for the years 2005 and 2019. The net worth of homeowners grows by 2.6 times (about C$ 1.4 million in 2019) while that of non-homeowners grows by 4.9 times (about C$ 0.2 million in 2019). This makes the 2019 average net worth of homeowners 6.3 times that of non-homeowners.

This chart shows Canadian average after tax income, in 2019 C$, of 25-34 aged homeowners and that of all homeowners in the bottom 30 net worth percentile for the years 2005, 2012, 2016 and 2019. Average income is consistently higher for 25-34 aged homeowners with an income of C$ 71,643 compared to C$ 59,837 for all homeowners in 2019.

This chart shows Canadian average mortgage debt, in 2019 C$, of 25-34 aged homeowners and that of all homeowners in the bottom 30 net worth percentile for the years 2005, 2012, 2016 and 2019. Average mortgage debt is consistently higher for 25-34 aged homeowners with a mortgage debt of C$ 203,914 compared to C$ 154,625 for all homeowners in 2019.

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