Although housing investment cooled during the quarter, residential real estate remained the major contributor to the increase in national wealth, accounting for more than half of the gain.

Sustained saving led by both corporations and government, alongside price gains for non-financial assets, largely accounted for the pick-up in the growth of national net worth. The gain in national net worth was also supported by a slight decrease in Canada's net foreign indebtedness (with marketable securities on a market value basis).

Propelled by the largest inflow of foreign direct investment in eight years, Canada's net foreign direct investment position decreased nominally in the fourth quarter of 2007. The sustained strength of the Canadian dollar continued to have a dampening effect on national net worth.

Household net worth grows at slower pace

Household net worth edged up 0.1% during the fourth quarter, as the decline in financial assets, coupled with the increase in liabilities, largely offset the impact of growth in non-financial assets.

While household debt (consumer credit and mortgage liabilities) increased at a significantly slower pace than the two previous quarters, household sector leverage rose. Debt stood at 18.2% of household net worth by year end 2007.

With new housing prices holding steady during the quarter, coupled with sustained new housing construction and renovation activities, residential real estate continued to expand, although at a reduced rate from the two previous quarters. The increase in the value of residential real estate remained the main contributor in the growth in non-financial assets.

A resilient residential real estate market more than offset the impact of a downturn in stock markets. The value of financial assets fell slightly as the decline in equities more than offset the increase in holdings of pension assets and deposits.

Non-financial corporate sector continues to post surplus

Boosted by a significant increase in undistributed corporate profits in the fourth quarter, and while continuing steadily to invest in plant and equipment and build up inventories, the non-financial corporate sector remained a net lender to the rest of the economy.

Despite this surplus, the demand for funds increased during the quarter. In particular, the private non-financial corporate sector turned mostly to loans to address their financing needs. Leverage for these corporations decreased, though marginally, for a third consecutive quarter.

Asset growth of financial institutions accelerates

Financial institutions continued to accumulate financial assets in the fourth quarter, though at a reduced pace. This increase was led by institutional lenders, driven by gains in their mortgage holdings, consumer credit and loan assets.

Government net debt rebounds

As overall government surplus contracted in the fourth quarter, total government net debt edged up after 14 consecutive quarters of decline. Government financing activity was dominated by the issuance of short-term paper and provincial bonds. Despite the marginal rise in government net debt, the net debt-to-gross domestic product (GDP) ratio managed to hold steady, with net debt in the fourth quarter accounting for less than half of GDP, down considerably from over 90% attained in 1996.

Annual review 2007

National balance sheet improves but at slower pace

National net worth expanded 7.0% in 2007, significantly down from the growth of 10.3% registered in 2006. This deceleration could be traced to the combined effect of a slight decline in national saving and an increase in net foreign debt.

National wealth grew by 8.0%, up from 7.6% in 2006. Residential real estate assets remained the main factor in the expansion of national wealth, accounting for over 60% of the increase.

Natural resource stocks grow on strength of strong demand and higher prices

A broader measure of national wealth (that is, including natural resources) increased 6.8% in 2007, up from the 5.9% growth registered in 2006. The value of selected natural resources (timber, energy and minerals) rose 1.2% to $1,095 billion in 2007, following a slight decrease of 1.5% in 2006 and a substantial increase of 27.7% in 2005.

Increases in the value of minerals and crude bitumen more than offset the declines in the values of natural gas and timber. Natural gas reserve values declined substantially as a result of decreasing production and increasing costs. Crude oil, crude bitumen and mineral reserve values rose, the latter on the strength of strong international demand and higher market prices.

National balance sheet accounts1
	Third quarter 2006	Fourth quarter 2006	First quarter 2007	Second quarter 2007	Third quarter 2007	Fourth quarter 2007	2006	2007
	market value, not seasonally adjusted, $ billions
National net worth
National wealth	5,079	5,157	5,284	5,412	5,498	5,571	5,157	5,571
	2.0	1.5	2.5	2.4	1.6	1.3	7.6	8.0
Net foreign debt	-92	-38	-27	-66	-95	-92	-38	-92
	...	...	...	...	...	...	...	...
National net worth	4,987	5,119	5,257	5,347	5,403	5,479	5,119	5,479
	2.8	2.6	2.7	1.7	1.0	1.4	10.3	7.0
National net worth per capita (dollars)	152,400	156,200	159,900	162,100	163,300	165,400	156,200	165,400
	2.5	2.5	2.4	1.4	0.7	1.3	9.2	5.9
... not applicable 1. The first line is the series itself expressed in billions of dollars. The second line is the period-to-period percentage change.

Note to readers

The national balance sheet accounts are statements of the balance sheets of all of the various sectors of the economy. They consist of the non-financial assets owned in the various sectors of the economy and of financial claims outstanding.

National wealth is the sum of non-financial assets (produced assets, land surrounding structures and agricultural land) in all sectors of the economy.

National net worth is national wealth less net foreign liabilities (i.e., what is owed to non-residents less what non-residents owe to Canadians). Alternatively, it is the sum of the net worth of the persons and unincorporated business, corporate and government sectors.

National saving is the sum of saving of the persons and unincorporated business, corporate and government sectors. National saving and investment contribute to change in national net worth.

The revaluation of assets and liabilities also contributes to changes in national net worth. The causes of revaluation include changes in non-financial asset prices, equity prices, interest rates, exchange rates and loan allowances.

Quarterly series, both book and market value, are available from the first quarter of 1990. For more information on the market value estimates, consult the Balance sheet estimates at market value page of our website.