Gap between rich and poor widens: study

Housing values help rich families get richer while the poor stay the same

The gap between the nation's richest and poorest families widened between 1999 and 2005, in part because of gains in the value of housing, according to a new Statistics Canada study.

The study, based on results of the 1984 Assets and Debts Survey, and the Survey of Financial Security conducted in 1999 and 2005, ranked family units into five groups from the lowest net worth to the highest. Each represented or one-fifth, of all families.

Between 1999 and 2005, the median net worth of families in the top fifth of the wealth distribution increased by 19 per cent, while the net worth of their counterparts in the bottom fifth remained the same.

In 2005, those in the top 20 per cent of the wealth distribution had a median net worth of about $551,000. In other words, half of the families in the top 20 per cent of the wealth distribution had net worth more than this figure, and half less. This is up from $465,000 in 1999 and $336,000 in 1984.

In contrast, the median net worth of the families in the bottom fifth stagnated between 1984 and 2005. In fact, the value of their assets never exceeded the value of their debts during the 1984 to 2005 period.

As a result, the top 20 per cent of families held 75 per cent of total household wealth in 2005, compared to 73 per cent in 1999 and 69 per cent in 1984.

Part of the growth in net worth among families in the top 20 per cent of the distribution was fuelled by increases in the value of housing.

In both 1999 and 2005, the vast majority of these families (at least 95 per cent) owned a house. During the six-year period, the median value of their principal residence rose a solid $75,000, reflecting sharp increases in housing prices.

In contrast, the value of holdings on a principal residence changed little among families in the bottom 20 per cent. At most, six per cent of these families owned a house during this time.

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