(Bloomberg) -- Canadian home s fell last year for the first time in three decades amid falling prices in some of the country’s priciest markets, even as debt burdens increased.
The of residential real estate in Canada held by households dropped C$30 billion ($22.5 billion) in the fourth quarter to C$5.10 trillion, from C$5.13 trillion in the same quarter the previous year, Statistics Canada reported Thursday. The 0.6 percent decline is the first decrease in country-wide home s in data going back to 1990.
Households meanwhile saw their debt burdens rise at the end of last year, with the debt to disposable income ratio hitting a record 174 percent in the fourth quarter. The worsening reflects a sharp slowdown in economic growth at the end of last year.
Canadians are also spending a larger proportion of their income on servicing that debt. The debt service ratio -- the proportion of a household’s income that goes to paying off principal and interest on debt -- rose to 14.9 percent in the quarter, the highest level since the fourth quarter of 2007.
Debt-to-disposable income should plateau moving forward, Priscilla Thiagamoorthy, an economic analyst at BMO Capital Markets, said by phone.
“Credit growth is slowing so as a result of that, we should expect to see maybe steady or lower debt ratios going forward, especially because of a cooler housing market and a slowdown in consumer spending,” Thiagamoorthy said.
In a separate report, the agency said new home prices fell 0.1 percent in January from a year earlier -- the first decline since 2009. While the index doesn’t include condominiums, the weakness was driven by declines in the Toronto and Vancouver regions, which fell 1.5 percent and 0.3 percent respectively.
©2019 Bloomberg L.P.
RECOMMENDED FOR YOU
POPULAR