I have a lot of respect for the accounting profession. Sure, they were partly responsible for some of the dot.com mess in the US and Nortel in Canada, but those are largely isolated incidents and aren't reflective of what kind of service an accountant can give an individual or family on a financial planning level.
The Institute of Chartered Accountants of BC released a recommendation during the recent BC budget consultations. It contains the most recent income and affordable-living stats for BCers.
Here's what they had to say:
Real personal disposable income per capita is the amount of income available after taxes and net of inflation. It illustrates changes in potential purchasing power and savings.You can read the full report here. So much for wage inflation being the reason why housing prices are so high. I'm surprised that the COL ratio is so low. This is perhaps because I'm not an accountant or economist and don't understand the stats they used to come up with that. Or it's perhaps indicative of the fact that real rents are considerably lower than mortgage payments and thus drag the 42.1% ratio down to 20.2%? What do you think?
Financial vulnerability is measured by total debt (both personal and mortgage) calculated as a ratio to personal disposable income.
Cost of living is expressed as the percentage of household expenditure spent on basic shelter and reflects the trend in actual household purchasing power.
As a place in which to LIVE, BC enjoyed a decreasing crime rate and decreasing cost of living, increasing disposable income, and high government health care spending. At the same time, however, personal debt continued to grow (largely as a result of high housing prices).
There are, however, areas in which BC still needs improvement: disposable income ($23,339); personal debt (1.24); and cost of living, as expressed by the percentage of household income spent on shelter (20.2%).
When comparing 2005 with 2004, disposable income in BC grew by 1.5%, bettering the Canadian average growth rate of 0.9%. (MY ADD: we're still below national average; Alberta and Ontario beat us by 4.1% and 0.2%; and our disposable income to debt ratios almost twice that of the national average).
BC’s real per capita disposable income rate was 3% below the national average in 2005.
BC’s higher disposable income gain is attributed to the 10.3% cut in real direct taxes (MY ADD: not income growth!)
Financial vulnerability is measured by total debt (both personal and mortgage) calculated as a ratio to personal disposable income. BC’s debt to personal disposable income ratio rose by 6% last year (the highest increase in our comparison), reaching a record high of 1.24 and leading our comparison for the tenth consecutive year. This increase was primarily due to increased mortgage debt, which rose by 11.7% in 2005.
Vancouver is the least affordable city in Canada and the 15th most expensive city in the world. Owning an average home requires 42.1% of British Columbians’ (not Vancouver, that's BC-wide) median pre-tax household income. Not surprisingly, mortgages comprise 75% of BC’s total debt.
BC’s cost of living in 2004, as expressed by the percentage of total household spending on shelter, was 20.2%, comparable to Ontario’s rate of 20.5%. This is not surprising given that both provinces have the highest housing prices in the country. (While housing prices in BC are 25% higher than in Ontario, other costs, including taxes, water, fuel, and electricity are lower in BC). (MY ADD: That ratio must be dragged down by real rents).
BC has less post-secondary educated citizen's than Alberta, Ontario and is below the national average.
BC’s wages, adjusted for inflation, decreased by 0.5% between 2004 and 2005, dropping to $21.05 per hour as a result of strong growth in the wholesale and retail trade sectors, which typically pay lower wages. (MY ADD: that number, based on a 40 hour work-week and 52 weeks/year = $43, 784 gross annual average income).
The number of British Columbians working in construction trades grew by 16.7%
in 2005, which led to an increase of 4.1% in average hourly earnings in this sector from January to November 2005.