The gap between Canada’s rich and poor has continued to shrink this year, according to new data from Statistics Canada.
Total household wealth rose 19.3% over the 12 months to mid-2021, growing by $2.3 trillion to $14.2 trillion, the national statistical agency reported.
StatsCan also reported that the gap between the poorest and wealthiest households narrowed between the second quarter of 2020 and second quarter of 2021.
The chasm between the wealthiest 20% and poorest 40% declined, as net worth for the bottom two quintiles grew at a faster rate, jumping by 41.8% compared with an 18.8% increase for the wealthiest.
The wealth increase was highest among younger households, with average net worth rising by 30.8% for households whose major income earner was younger than 35 years of age. The bulk of the increase (75%) for these younger households was due to real estate gains.
However, the top quintile still controlled over two-thirds (67.1%) of household wealth, while the poorest 40% represented only 2.7% of the total, StatsCan said.
Household debt also continued to rise.
“Due partly to continued low interest rates, ongoing government support measures and seasonal effects, housing market activity heated up in the second quarter of 2021 as households increased their mortgage debt at the fastest pace since the end of 2019,” StatsCan said.
For the top 20% of households, average mortgage debt was up 13.3% in the second quarter, compared with Q2 2020.
Average non-mortgage debt — including credit cards, lines of credit and instalment loans — increased at the fastest pace since the onset of the pandemic in the second quarter, StatsCan said.
Despite the recent rise in debt levels, household leverage remained below pre-pandemic levels, as asset values outpaced the growth in debt.
And StatsCan noted that the poorest households were also the only segment that reduced their average debt from the second quarter of 2020 to mid-2021, as mortgage debt declined by 5.3%, and non-mortgage debt edged 2.2% lower, over that period.