With renters typically paying a larger share of their income than homeowners – and those with low incomes even worse off – the long-term accumulation of wealth for this significant share of the population is at risk.
Freestone points out the phenomenal impact that homeownership has had on Canadian wealth over the past three decades, accounting for almost half of household wealth accumulation and boosting net worth to 13 times disposable income in the first quarter of 2023 compared to nine times in the last quarter of 2010.
For renters, net worth grew from three times disposable income to just 3.5 times over the same period.Â
Freestone’s analysis noted that the pandemic years saw something of a balancing between homeowners and renters with both groups saving roughly the same as a percentage of their disposable income, but while the last year has seen both cohorts spending more than their take-home pay, renters (9%) spent a larger share (7%).
All of this exacerbates the homebuying barriers for renters (who are often lower earners) and the stats concur with Freestone’s report highlighting that in 1999 homeowners paid 23% of their take-home pay to housing costs including utilities while for renters it was 25%. But in 2022, the gap had widened – 21% for homeowners and 29% for renters.
