Canada’s National Housing Agency is reporting that household debt is now the highest of any G7 country.

The data showed that the amount owed by Canadian households is also higher than the country’s entire gross domestic product (GDP). The Canada Mortgage and Housing Corporation said high home prices are to blame for the ballooning debt.

Household debt in the United States and United Kingdom by comparison has shrunk in the last 10 years. In a report released on Tuesday, the Canada Mortgage and Housing Corporation warned that Canadians would not be able to weather a recession because of the high amount of debt they owe.

The corporation’s deputy chief economist, Aled ab Iorwerth said, “unfortunately, Canada’s very high levels of household debt – and the highest in the G7 – makes the economy vulnerable to any global economic crisis.”

In his report, ab Iorwerth declared that 75 per cent of Canada’s household debt comes from mortgages.

Home prices rising in Canada

As home prices increase in Canada, the household debt in Canada rises as well. He added that longer term, re-establishing housing affordability in Canada will be key to reducing household debt if they want to become homeowners.

The average home price in Canada is C$716,083 ($528,000; £426,000), according to the Canada Real Estate Association, though homes in Canada’s most populous city, Toronto, average about C$1.15 million. Home prices are the highest in Vancouver, British Columbia, where the average price tag for a property is around C$1.29 million.

Both Toronto and Vancouver consistently rank among the top 10 most unaffordable cities in the world. The average value of a Canadian home has more than doubled since 2011, when houses were valued at around C$352,000.

Comparison with other Western nations

As of 2021, Canada’s household debt is seven per cent higher than the country’s entire GDP, which is an increase from 2010, when household debt was about five per cent lower. The BBC reports that by comparison, household debt in the US fell from 100 per cent of the country’s GDP in 2008 to about 75 per cent in 2021.

Household debt as a share of GDP in the UK also fell from 94 per cent in 2010 to 86 per cent in 2021. “While US households reduced debt, Canadians increased theirs and this will likely continue to increase unless we address affordability in the housing market,” ab Iorwerth said.

Among major Western nations, only Australia has a higher household debt rate as a share of its GDP (119 per cent). Canada’s government has been under pressure to address the growing issue of housing unaffordability.

Earlier this year, Canada enacted a two-year ban on foreigners buying homes in the country in an attempt to ease unaffordability. Some have also called on officials to enact measures that will increase Canada’s housing supply, as the country’s population has grown by a record of more than a million people in 2022.