Wealth inequality has increased among Canadian families in recent years, with average wealth increasing faster among higher-income families, according to a new study published by Statistics Canada.
Wealth (or net worth) is defined by StatsCan as the total value of family assets minus outstanding debt.
Between 1999 and 2012, the average wealth of Canadian families rose by 73%, from $319,800 to $554,100, the study reveals.
However, average wealth increased at double the rate among higher-income families, compared with lower-income families, the study notes.
Among families with in the top income quintile (the top 20%), average wealth increased by 80% between 1999 and 2012, rising from $721,900 to more than $1.3 million.
At the other end of the income spectrum, families in the bottom income quintile saw their average wealth increase by just 38%, from $79,500 to $109,300, over the same period.
Middle income quintile families were right in line with the overall average, as their average wealth increased by 73% during the period, from $261,800 to $453,300.
Families in the top income quintile held 47% of the total household assets of Canadian families in 2012, the study reveals, up from 45% in 1999.
Families in the top quintile also accounted for 41% of overall debt in 2012, up from 40% in 1999.
Conversely, families in the bottom income quintile held 4% of total wealth in 2012, down from 5% in 1999. They also accounted for 5% of overall debt, according to the study.
The composition of wealth also evolved between 1999 and 2012, the study reveals. The cumulative net worth of Canadian families increased by $4.17 trillion (in 2012 dollars) during the period, with about half the increase in net assets coming from real estate, and the rest of the increase coming from other types of assets (including employer pension plans).
Among top quintile families, wealth increased by $2.02 trillion, the study reports, but their asset gains were less dependent on real estate than other income groups. For these families, about 45% of their asset gains were due to real estate, and 55% came from other types of assets.
In contrast, the bottom income quintile families generated 73% of their asset gains from real estate.
Between 1999 and 2012, real estate assets as a share of overall assets rose in all income quintiles, but particularly among bottom income quintile families, the study notes.
Real estate assets rose from 46% of total assets to 57% among families in the bottom income quintile, according to the study. For the top income quintile families, the share increased from 34% to 40%.
Debt composition remained relatively stable over the period, the study reveals, with mortgage debt continuing to account for approximately three-quarters of overall debt in both 1999 and 2012 in almost all income quintiles.
The study also looked at family units with “low income and no wealth,” which it defined as those whose family income was below 50% of the median, and with a net worth equal or below zero (excluding employer pensions). It reports that,
In 2012, 3.5% of Canadian family units had low income and no wealth in 2012, which was largely unchanged from 1999 (3.3%), the study reports.
The types of families that were more likely to be in this situation include those with their major income earner aged 15 to 34 (8%), families whose major income earner had less than a high school diploma (5%), unattached individuals (9%), lone-parent families (10%) and families who immigrated recently (8%), the study reveals.