Analyzing Canadians’ Assets, Liabilities and Spending Power
New Data Powers Financial Planning, Fundraising, Marketing and Merchandising
Toronto, August 11, 2014 – Environics Analytics, the marketing services and data analytics company, today announced the release of WealthScapes 2014,the most comprehensive database available on the assets, liabilities and wealth of Canadians. Updated to December 2013, the latest edition features an expanded database of more than 120 key financial and investment statistics that serves as a balance sheet for every neighbourhood (or small-area census dissemination area) in the country.
Now in its seventh year, WealthScapes has proven to be a valuable tool for financial planning, fundraising, marketing and merchandising. Banks and investment companies use the database to market and calculate potential sales for specific products like mortgages, mutual funds and GICs. Fundraisers at universities and charities use it to find contributors with significant spending power beyond what their household incomes would suggest, such as retirees on fixed incomes who have sizable investment portfolios. Retailers and real estate developers even draw on WealthScapes data to plan commercial and residential developments.
To expand the dataset’s effectiveness, Environics Analytics incorporated two major enhancements that increased the number of financial variables from 109 to 121. The first enhancement refines the classification of savings, investments and chequing and savings accounts to categories within and outside of registered savings plans (RSPs). The second provides consumer debt statistics based on aggregated, privacy-compliant, small-area data from Equifax Canada. The changes are designed to help financial institutions and investment advisors produce better estimates of market and wallet share; they’ll also assist retailers and lenders in gaining a better assessment of the indebtedness of Canadian households using what industry analysts refer to as “the gold standard of consumer debt data.”
“These enhancements reflect the continuing dialogue with our customers to make WealthScapes even more effective at helping them understand their customers and markets,” says Catherine Pearson, vice president and leader of the financial services practice at Environics Analytics. “With every year, we see WealthScapes being adopted by more organizations beyond the financial sector—among retailers and charities, and universities and government agencies. All have found value in using the financial data to reach their audiences and identify markets of opportunity.”
Among the financial and investment statistics included in the dataset: average net worth, income distribution, disposable and discretionary income, savings by type (demand, GICs and term), investments by type (stocks, bonds, mutual funds and segregated funds), consumer debt, RSP components of investments, mortgages, loans, lines of credit and credit card accounts. All can provide valuable insights to help organizations develop differentiated marketing strategies, targeted products and effective messages that address their customers’ changing needs.
Environics Analytics Reveals Canadians’ Rising Fortunes
Toronto, August 11, 2014 – Canadians are experiencing a period of robust fiscal health, according to the WealthScapes 2014 financial database released today by Environics Analytics. The new numbers indicate that 2013 was a very good year for Canadian balance sheets: Net worth was up 7.7 percent over the previous year, consumer debt was flat and real estate performed more predictably compared to recent years—increasing a solid 6 percent over 2012. The data reveal that not only are the rich (the top fifth of the populace) getting richer—their net worth increased 8.1 percent over the previous year—but the poor (the bottom fifth) are feeling more flush too, with their net worth rising 8.7 percent.
The data on Canadian net worth ([defined as] the total combined value of liquid and real estate assets minus debt) are among several upbeat findings in WealthScapes 2014, now in its seventh year reporting household financial statistics. Although many Canadians still face higher-than-normal unemployment, the latest statistics reveal just how strong the financial rebound has been since the 2008 economic downturn. Nationwide, the new data indicate that stock portfolios are growing, savings are on the rise and mortgage debt has ticked up only modestly. “Overall, 2013 was an excellent year for Canadian balance sheets,” says Peter Miron, senior research associate at Environics Analytics and lead developer of WealthScapes 2014. “Many people benefitted from the strong stock market. But they also saved more and didn’t take on more debt—preparing [perhaps] for a rainy day. This was one of the best years we’ve had since the recession.”
Created by Environics Analytics (EA), the Toronto-based marketing services and data analytics company, WealthScapes helps companies like financial institutions and retailers as well as charities and universities analyze the fiscal health of current and potential customers, identify promising markets and develop business strategies to increase their market share. Updated to December 31, 2013, the 2014 release was expanded to include 121 financial and investment statistics, providing additional categories within and outside of registered savings plans (RSPs), as well as consumer debt statistics based on aggregated, privacy-compliant, small-area data from Equifax Canada. As in years past, the database was built using sophisticated modelling techniques and a variety of authoritative sources—such as the Bank of Canada and Statistics Canada—to create the most reliable financial data available in the industry.
Among the other noteworthy findings coming out of the WealthScapes 2014 release:
1. Vancouver, Toronto and Calgary Still the Wealthiest—And the Gap Between Them is NarrowingThis trio of large cities retained the title as the wealthiest in Canada, with an average household net worth of $710,095, $693,652 and $680,377, respectively. But the difference in affluence is getting smaller as the net worth in Vancouver, Toronto and Calgary grew by 6.5 percent, 8.8 percent, and 10.8 percent, respectively, compared to 2012. While increases in liquid asset and debt were similar among the three cities, the key differentiator was real estate values—up a modest 2.8 percent in Vancouver, a strong 6.6 percent in Toronto and roaring 9.1 percent in Calgary. Vancouver continues to reign as Canada’s wealthiest city because of its pricey real estate—averaging $579,250 per household compared to $535,002 in Toronto and $485,364in Calgary.Canada’s most populous city, Toronto, benefitted from a 6.1 percent rise in savings—nearly triple the national average—and a 3.7 percent decline in consumer debt—which is a significant drop given that nationwide consumer debt remained essentially unchanged. And in addition to its healthy real estate performance, Calgary benefitted from a 2.9 percent decline in consumer debt; those two indicators ranked among the best for large cities.
What unites Canada’s three richest cities is their strikingly similar household net worth—all within $29,718, or 4.4 percent, of each other. What distinguishes them from other cities in Canada is the high value of their real estate: The average household in these three cities has $533,172 worth of real estate holdings.
2. Montreal is the Crown of QuebecWhile not the richest city, Canada’s second largest metropolis, Montreal, financially outperformed the rest of Quebec. Its liquid assets grew by 7.2 percent, compared to the provincial average of 6.3 percent. At the same time, Montreal’s savings rate climbed 3.8 percent while the province as a whole saw savings grow at a modest 1.9 percent—half the rate.
3. Best Performers Make an Eclectic Group There were some surprises among the cities that experienced the greatest increase in net worth during the last year. Among Canada’s 20 largest cities, Oshawa, Halifax and Calgary performed the best financially. Their household net worth grew by double digits—11.2 percent, 10.9 percent and 10.6 percent, respectively. While Oshawa’s and Calgary’s stellar growth was fueled by rising primary real estate values of 10.9 percent and 9.4 percent, respectively, Halifax’s net worth increase was primarily due to liquid asset growth of 12.7 percent—well ahead of the 7.2 percent national average. The strong performance can be traced to Halifax scoring the second highest savings rate in Canada (after St. John’s) and its residents’ rising stock and mutual fund holdings during a bull market.
“Halifax residents have always been active investors in the stock market, and they suffered in the 2008 downturn,” says Miron. “But last year, their investing really paid off. They did well.”
4. St. John’s Baffles the Experts Financially, the fourth fastest-growing city was St. John’s which, among Canada’s 20 largest cities, experienced both the highest growth in liquid assets, 15.4 percent, and the highest growth in debt, 10.2 percent. Along with average primary real estate growth of 7.1 percent, St. John’s reported a 10.0 percent rise in household net worth—just behind the top three performers (Oshawa, Halifax and Calgary). Analysts attributed its robust performance to an above-average 3.1 percent increase in household savings—with residents socking away an additional $14,228 compared to other cities. Says Miron, “You don’t usually see liquid assets and debt increasing at the same time. It’s an enigma.”
5. The Rich Remain RichThe three wealthiest provinces at the end of 2012 retained their top status at the end of 2013: 1) British Columbia (net worth: $591,047), 2) Alberta ($531,067) and 3) Ontario ($523,969). Yet the new financial data indicate shifting fortunes among the provinces. While British Columbia’s households remain the wealthiest in Canada, they also experienced the lowest net worth gain in 2013, only 5.8 percent. This was due to lackluster primary real estate growth of only 2.9 percent—about half the 5.6 percent national average. Meanwhile, third-ranked Alberta had a good year—its net worth grew by 10.0 percent—and it leap-frogged Ontario in the standings, becoming the second wealthiest province in Canada.
6. A Good Year in Nova ScotiaAlberta, Nova Scotia and Ontario had the highest net worth growth among the provinces in 2013: 10.0 percent, 9.8 percent and 8.2 percent, respectively. While strong gains in Alberta and Ontario resulted in part from a rise in primary real estate—7.4 percent and 6.9 percent, respectively—Nova Scotia’s healthy performance was due to its very strong liquid asset growth of 10.4 percent, derived from both rising stock and mutual fund holdings and very high savings rates. Unlike some investors who keep chasing a rising stock market, those in Nova Scotia steered their cash into stocks and savings.
7. Saskatchewan: A Hot Province Starting to Cool? In recent years, Saskatchewan experienced tremendous growth in terms of household wealth. But with its net worth increasing just 7.4 percent this past year—below the 7.7 percent national average—Saskatchewan bested only British Columbia, Quebec and New Brunswick. While the prairie province’s liquid assets grew an impressive 9.1 percent (second only to Nova Scotia), households increased their consumer debt by 7.6 percent—more than triple the Canadian average of 2.3 percent and the highest among all provinces. With Saskatchewan households having the highest liquid asset contributions relative to income of any province, wealth distribution in the province is becoming increasingly polarized.
“A lot of people moved to Saskatchewan to take advantage of the resource-based jobs, and they sparked an economic boom,” explains Miron. “But now the real estate market is starting to cool off while incomes are staying high. Taking on more debt is a belief in better days to come.”
8. The Year of ProsperityTo put it simply, 2013 was a very good year for Canadians’ fiscal health. The average net worth per household grew by 7.7 percent to $442,130, the result of a 7.2 percent increase in liquid assets tempered by a modest 2.3 percent increase in household debt. Much of the growth in liquid assets can be attributed to the robust stock market in Canada and the U.S. Between the end of 2012 and 2013, the average Canadian household saw the value of their stocks rise 8.3 percent to $56,557 and total investments increase 10.4 percent to $145,348. At the same time, real estate holdings grew at a solid 5.9 percent to $335,834 per household—the majority of this growth in secondary real estate rather than principal residences—but low interest rates kept mortgage debt to a manageable 3.3 percent.
9. More Good DebtDigging into the household debt data reveals some positive trends. In 2013, the growth in Canadian household debt was due entirely to mortgage debt growth of 3.3 percent. Consumer debt—credit cards, loans and lines of credit—was unchanged from 2012. In fact, the debt-to-disposable income ratio dropped in 2013 from 143.9 percent to 141.6 percent. “Canadians are taking out mortgage debt at the same rate that they’re paying it down,” says Miron. However, the deleveraging was not even across Canada, with the debt-to-disposable income ratio dropping fastest in Prince Edward Island, Nova Scotia, New Brunswick and British Columbia and the ratio increasing in Saskatchewan, Newfoundland and Manitoba.
10. A Rising TideWealthScapes 2014 data show that, in general, the rich (top fifth of the populace with more than $552,720 in net worth) are getting richer: their net worth is up 8.1 percent over the previous year. However, the poor (or bottom quintile with less than $148,017 in net worth) are feeling more flush too, seeing their net worth rise by 8.7 percent. After dividing Canada’s populace into five equal household quintiles, analysts found the best performing quintile in 2013 was the bottom fifth, largely due to a 6.3 percent growth in real estate assets and an 8.6 percent growth in liquid assets. (That figure was tempered by the highest debt growth of any quintile, up 4.4 percent, stemming from increased mortgage and consumer debt.) The second best performing quintile was the wealthiest, a result of strong 8.1 percent growth in liquid assets and a very modest 0.3 percent increase in debt—the lowest debt increase of any quintile.
While analysts will continue to crunch the numbers to answer hot-button issues—Is the gap between the Canadian middle-class and the rich widening? Do Canadians have a higher median income than Americans?—Canadians can take comfort in WealthScapes’ bottom line: the nation’s households experienced an improved state of financial well-being in 2013 as the 2008 recession becomes more and more a distant memory.
Maps based on WealthScapes 2014 are available from Julia Vasilev, Marketing Manager of Environics Analytics, at 416.969.2733 or email@example.com. Here are captions for the two, attached maps.
Percent change in net worth
Greater Toronto performed well once again in 2013, growing by 8.8% to an average net worth of $693,652. While most neighbourhoods saw positive growth, the strongest net worth gains occurred in areas including York University Heights and Bayview Village in North York, and Trinity-Bellwoods, a trendy neighbourhood on the west side of downtown. By contrast, some areas in the downtown core, in addition to the Thornhill area just north of Toronto, and Lawrence Heights, recorded the sharpest declines.
In 2013, Vancouver’s greater metropolitan area had an overall debt-to-asset ratio of 21%, which is a slight decline from 22% in the previous year. But there is a clear divide in the city of Vancouver, with communities like Arbutus Ridge and Kerrisdale in western Vancouver having some of the lowest debt-to-asset ratios. Conversely, several neighbourhoods in East Vancouver, including Mt. Pleasant along East Main Street, have over 40 cents of debt for every dollar they hold in assets, or nearly twice the national average.
About the Methodology
WealthScapes 2014 was built using authoritative data and sophisticated modelling techniques. Updated to December 2013, the latest version features a database of key financial and investment statistics including income and income distribution, disposable and discretionary income, savings by type, investments by type, RSP components, consumer debt, mortgages, loans, lines of credit and credit card accounts. The key variables used in WealthScapes have been created to match the best available control totals in Canada so that they will be endorsed by Chief Economists. Along with methodological and data improvements to current and historical datasets, WealthScapes is updated to produce the best possible estimates and temporal comparisons. The data can be used on its own for marketing applications or aggregated to develop precise estimates for such applications as analyzing bank and retail trade areas and sales territories.
About Environics Analytics
Environics Analytics is the premier marketing services and data analytics company in Canada. Specializing in proprietary data, purpose-built software and industry-focused consulting, it provides data-driven analytics to help organizations better understand their customers and markets.Its team of veteran modelers and geographic experts are industry leaders in sales forecasting, developing demographic and spending projections, and site location modelling. To learn more about Environics Analytics, please visitenvironicsanalytics.ca(33 Bloor Street East, Suite 400, Toronto, ON M4W 3H1).