Global household wealth dropped by more than 5% over the past year, and Canada, which saw its number of millionaires decline, now has the highest household debt to income ratio in the G7, says a new report from the Credit Suisse Research Institute (CSRI).

The report finds that aggregate household wealth fell 5.2% to US$223 trillion, between mid-2011 and mid-2012. Between the European sovereign debt crisis, and the flight to U.S. assets, the drop in wealth (in U.S. dollar terms) is particularly large for Europe, which lost about US$10.9 trillion of household assets. The Asia Pacific region dropped US$1.4 trillion in assets.

Indeed, the strength of the U.S. dollar against most other currencies is one of the central reasons for the drop in wealth. Based on constant exchange rates, aggregate global household wealth actually rose by about 1% over the last year, it says.

“There’s no question that the economic uncertainties of the past year – particularly those affecting the Eurozone – have cast a huge shadow over household wealth. Our research confirms that economic recession in many countries combined with widespread equity price reductions and subdued housing markets have produced the worst environment for wealth creation since the financial crisis,” said the Credit Suisse Research Institute’s Michael O’Sullivan and Richard Kersley.

For its part, Canada saw household wealth decline by US$440 billion, it notes. And, while the number of adults that rank in top 10% of global wealth rose from 13.6 million to 13.6 million, the number that rank in the top 1% dropped from 1.6 million to 1.43 million; and, the number of US$ millionaires declined by almost 100,000 to 842,000 from 940,000 in the previous report. Moreover, the report notes that Canada currently has the highest household debt-income ratio among G7 countries, while Italy has the lowest.

In the report, Credit Suisse estimates that worldwide there are 84,500 ultra high net worth individuals, defined as those with net assets exceeding US$50 million. Of these, 29,300 are worth at least US$100 million, and 2,700 have assets above US$500 million. North America dominates the regional ranking, with 40,000 UHNW residents (47%), the vast majority (37,950) of them in the U.S.; while 22,000 live in Europe (26%); and, 12,800 (15%) are based in Asia-Pacific countries, excluding China and India.

Notwithstanding the recent decline in global wealth, the report forecasts that wealth will rise by almost 50% in the next five years from US$223 trillion in 2012 to US$330 trillion in 2017. It also expects the number of millionaires worldwide will increase by about 18 million to 46 million in 2017.

The U.S. is forecast to remain as the world’s wealthiest country over the next five years, with China surpassing Japan for second place.