Incomes up, debt up too

High housing costs makes it hard to attract workers

First, the good news: We're all making more money.

The bad news, according to the Chartered Accountants of B.C., is that skyrocketing housing costs are pushing up personal debt levels.

However, further gains in disposable income are on the way, the bean counters say.

"The province's recent increase in personal disposable income, combined with robust job growth, suggests that further gains in disposable income are on the horizon," said Richard Rees, chief executive officer of the chartered accountants.

"If there is a concern, it is about the high cost of housing in the province and its impact on personal debt levels," he added.

"High housing costs make it more difficult to entice people to move to B.C., and this is a concern in today's competitive labour market, where skills shortages exist."

The accountants also point out that mortgage debt is not altogether bad, since mortgages for the most part substitute for rent and contribute to asset accumulation.

Nevertheless, Vancouver is the most expensive city in Canada for housing, and the 15th most expensive city in the world.

B.C.'s average real personal disposable income in 2005 was $913 higher than in 2000 -- an increase of 4.1 per cent above the 3.1-per-cent increase across Canada. That resulted in real disposable income in 2005 increasing to $23,339, close to the national average of $24,099.

According to the study, B.C.'s personal debt levels rose by six per cent last year, primarily due to rising mortgage debt. In fact, the study found that mortgages comprise 75 per cent of B.C.'s total personal debt, compared to between 55 to 68 per cent in the rest of the country.