The global financial crisis had much less effect on the Canadian economy than that of the USA, thanks in large part to Canada’s more conservative banking practices. The long-term rise in housing construction and prices was only briefly interrupted and, from 2008 to 2011, the market saw new construction and house price increases that were common in many countries prior to 2008.
Rapid growth in mortgages fuelled a continuing rise in household debt. Mortgage terms were tightened, however, a few years ago, which appears to have had the desired effect as house price increases have moderated in the last three years. It may be that Canada’s housing market has achieved the elusive soft landing.
Measured in USD, household wealth grew at an annual rate of 7.1% between 2000 and mid-2014. If exchange rate changes are excluded, the rise in wealth is more modest, with annual growth of 4.4%. However, over the last two years the Canadian dollar has declined somewhat relative to the USD, so that growth has been faster using the constant exchange rate measure.
At USD 274,500, wealth per adult in Canada is 21% lower than in the USA (USD 347,800). Canada is similar to the USA in that more than half of its household wealth is held in financial assets. But wealth is more equally distributed than in the USA, which accounts for the much higher median wealth of USD 98,800, compared with 53,400 for the USA. Relative to the USA, Canada has both a smaller percentage of people with less than USD 10,000 and a larger percentage with wealth above USD 100,000. It has 1,138,000 millionaires, and accounts for 3% of the top 1% of global wealth holders, despite having only 0.5% of the world’s population.