The census metropolitan areas of Calgary and Edmonton are among the highest in Canada for their ratio of debt to after-tax family income, according to a study by Statistics Canada.
And the ratios for the two Alberta cities is higher than the Canadian average.
The study listed the following census metropolitan areas in the country for having the highest ratios: Victoria, 240 per cent; Vancouver, 230 per cent; Toronto, 210 per cent; Calgary, 189 per cent; Hamilton, 183 per cent; and Edmonton, 171 per cent.
The Canadian average was 165 per cent.
The federal agency said median family net worth in Canada rose from $144,500 in 1999 to $295,100 in 2016. The Calgary region saw a hike from $156,900 to $339,400 during that period while for the Edmonton region it went from $158,300 to $230,200.
In 2016, Vancouver had the highest median family net worth at $434,400.
“Household debt-to-income levels in Canada and the United States have trended in opposite directions over the last decade, reflecting inter alia differences in the impact of the financial crisis and Great Recession on household balance sheets in the two countries,” said StatsCan.
“U.S. households were more severely affected by these events as sharp reductions in the value of household assets resulted in substantial deleveraging. Debt-to-income levels for U.S. households have fallen sharply over the last decade, and are currently about 25 per cent below pre-recession levels. By contrast, debt-to-income levels among Canadian households continued to edge higher in the years following the recession, before rising sharply in 2015 and 2016 when income growth slowed as the economy adjusted to lower oil prices. Currently, Canadian debt-to-income levels are over 20 per cent higher than in late 2007.”
Levels of household indebtedness in Canada have also garnered much attention in recent years, in part because household spending has been a consistent source of economic growth, compared with less-even contributions to growth from investment spending and exports, said the federal agency.
“The gradual onset of higher borrowing costs since mid-2017 coupled with increased house prices has brought about a renewed focus on the ability of households to manage their existing debt liabilities, particularly in view of slower wage growth,” it said.
Mario Toneguzzi is a Troy Media business reporter based in Calgary.
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