SOURCE: Chartered Professional Accountants of British Columbia

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September 19, 2016 10:22 ET

B.C.'s High Cost of Living Impacts Province's Livability

CPAs Say High Consumer Debt Puts British Columbians at Risk

VANCOUVER, BC--(Marketwired - September 19, 2016) - In 2015, B.C.'s consumer debt per capita jumped by 2.6 per cent to $60,043, the highest level in the country. According to the BC Check-Up, an annual publication by the Chartered Professional Accountants of British Columbia (CPABC), B.C.'s high consumer debt per capita was largely driven by growth in mortgage debt, which was fuelled by skyrocketing housing prices. As a result, B.C. could become a less desirable place to live, especially for young workers.

Consumer debt includes personal debt­, such as credit card, personal lines of credit, or personal loans, and mortgage debt. Mortgage loans comprise approximately three-quarters of consumer borrowing in B.C. Between 2010 and 2015, residential mortgage loans at chartered banks and credit unions in B.C. grew by 66.1 per cent, with a 5.2 per cent growth from 2014 to 2015.

The increase in consumer debt per capita coincided with the escalation of housing prices, primarily in the Lower Mainland. According to the RBC housing affordability index, for households who earn around the media pre-tax income in Greater Vancouver, 76.9 per cent of the income was spent on housing based on an annual average of the index in 2015. For those in Victoria, 45.8 per cent of median pre-tax income went to housing costs. As of March 2016, Vancouver and Victoria's housing became even more unaffordable, as the index climbed to 87.6 and 47.4 per cent respectively. This was due to rising costs of single-detached homes in both markets.

The deterioration of housing affordability in the Lower Mainland not only fuelled rising debt burdens and excluded new buyers, but it also made the region a less attractive place to live. Housing is cited as the key reason that many young workers and families are leaving for other B.C. communities and Canadian provinces in the hopes of being able to afford a home.

Quote:
Richard Rees, FCPA, FCA, President and CEO of CPABC:
"High consumer debt and housing costs put British Columbians at financial risk. The average provincial savings rate in 2015 was -1.9 per cent, indicating a high level of financial vulnerability. Spectacular gains in housing prices not only present problems of affordability to new and young home buyers, but will fuel more consumer borrowing in the absence of measures to dampen mortgage lending or a significant slowdown in housing prices."

Quick Facts on B.C.'s social climate in 2015:

  • Long-term unemployment, defined as the share of the labour force that has been out of work for 52 weeks or more, remained the same at 0.7 per cent, which was 0.1 per cent lower than the national average. It remained well above pre-2009 levels in B.C.
  • The share of young workers with less than high school education increased by 0.7 percentage points to 5.9 per cent, which was significantly less than the national average of 8.2 per cent.

Learn more about the BC Check-Up at www.bccheckup.com.

About CPA British Columbia
The Chartered Professional Accountants of British Columbia (CPABC) was formed through the amalgamation of the Institute of Chartered Accountants of BC (ICABC), the Certified General Accountants Association of BC (CGA-BC), and the Certified Management Accountants Society of BC (CMABC). CPABC was officially established when the CPA Act came into effect on June 24, 2015. CPABC represents over 34,000 members and 5,200 CPA students and candidates.

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