Gap between high and low income Canadian households widening at record pace: StatCan

Amid the increased cost of living and declining real estate market, Statistics Canada is reporting a rapid widening gap between high and low income households. (Pexels)

A rapid widening gap between high and low income households has increased at an all-time record since 2010, according to new data from Statistics Canada.

In the first quarter of 2023, StatCan reported the gap in net worth between the poorest and richest households grew by 1.1 percentage points, the fastest increase since 2010. For comparison, the wealth gap declined by 1.6 percentage points between the first quarter of 2020 and first quarter of 2022.

However, the first quarter of 2020 still reported a higher overall wealth gap increase with 65.6 percentage points, in comparison to 2023's 65.1 percentage points.

The report also found Canadians aged 45 or younger tend to live in lower income households despite this group only representing 36.2 per cent of all households. Younger households make up 55.2 per cent of the lowest two wealth quintiles, according to the report.

With the rising cost of living, the least wealthy had their net worth decrease by 13.8 per cent, similar to losses reported in the same period last year.

REAL ESTATE TAKING A TOLL ON HOUSEHOLDS

The biggest driver of the reduction in net worth of all households, making up 92.1 per cent, was real estate.

According to findings from this first quarter, the average value of real estate owned by households decreased by 8.6 per cent. Additionally, the national average price for a residential home went up to $686,000, roughly 13.7 per cent from the first quarter of 2022.

Lower income households had their net worth reduced because an increase in mortgage debt exceeded the average value of their home. A net worth that likely also took a hit from increased non-mortgage debt that rose by 4.6 per cent, the report said.

Younger Canadians aged 35 or less had their net worth decrease by 8.7 per cent in relation to their home while Canadians between the ages of 55 and 64 saw a decrease of 1.8 per cent,

As for older Canadians in a low income household, most of their earnings were reported from their retirement benefits instead of employment and investments as high income households did.