High housing prices and the increasing cost of living have left British Columbians mired in debt levels far exceeding the national average.
People in Vancouver owed an average of $360,683 in consumer debt in 2023, which includes housing mortgage, credit card debt, auto loan, student loan and other personal debt, according to a study released last month by personal finance platform Savvy New Canadians.
That’s the highest in Canada and almost six times the average Canadian consumer debt ($65,000). It’s also nearly double the debt per capita in Toronto ($187,350), ranking it third highest in the country.
Victoria, which had an average house price of $869,500 in November, ranked the second highest in Canada with $305,365 consumer debt per capita. The city also tops the list for credit card debt in Canada with $12, 874 owed per capita, followed by Vancouver with $12,332 per capita.
“Mortgage debt significantly contributes to overall consumer debt. … Vancouver leads the nation in consumer debt, reflecting the city’s high housing prices,” stated the report, noting the average consumer debt for people in Vancouver has increased by 14.14 per cent since 2019.
The average house price in Metro Vancouver was recorded at $1,185,100 in November, which was the highest in Canada and more than double the prices in other major cities including Calgary, Edmonton, Winnipeg and Montreal, according to Canadian Real Estate Association data.
“This type of debt provides potential clues to how consumers respond to financial conditions. In tough economic times, households may rely more on credit to meet ends,” reads the report.
Another B.C. city that made the top 10 list was Kelowna, which ranked the sixth highest with $112,334 in average consumer debt.
Lack of housing affordability propels debt growth
Surging housing prices have fuelled the growth of Canadians’ consumer debt, especially those in the hot housing markets, according to the report.
“Canada’s consumer debt landscape is shaped predominantly by mortgages and home equity lines of credit (HELOCs), which account for a substantial portion of the borrowing habits, totalling 83.2 per cent of the debt composition,” the report stated.
From 2019 to 2023, Canadians’ mortgage debt has grown the fastest by 22.88 per cent, followed by other credit (+5.62 per cent), HELOC (+5.22 per cent) and credit card debt (+3.98 per cent).
Meanwhile, auto loans and typical lines of credit have decreased by 4.65 per cent and 8.36 per cent, respectively.
“The surge in mortgage debt, constituting 74.3 per cent of Canadian household debt, was propelled by soaring housing prices during the pandemic, prompting individuals to take on higher mortgage obligations to secure homes,” stated the report.
“Population growth and immigration have further intensified housing demand, exacerbating the housing market’s competitiveness.”
