Housing hunting raises Canadian household debt to record levels, but net worth is also going up
The recent data from Statistics Canada shows that Canadians kept buying real estate in 2021, raising home prices and debts to new record highs.
The cost of properties owned by households in Canada was up by $1.5 trillion (US$1.2 trillion) to $8.3 trillion last year.
Due to low interest rates, a high demand for more space during the COVID-19 pandemic, and strong immigration flow, prices for dwellings, land and other buildings owned by Canadians rose by record 22%.
Such a gain pushed net worth per person in the country up to $449,450 at the end of 2021, which is almost a quarter more than in 2020.
Most of the housing activity has been caused by new mortgages, with the ratio of household credit market debt to income growing to a record 186% at the end of 2021.
These results will only intensify concerns over extremely low interest rates inflating Canada’s housing market and fueling financial stability risks through debt. It will be another reason for the central bank to raise borrowing costs.