The cost of living has skyrocketed in the post-pandemic economy. In recent months, several surveys have revealed that consumers and businesses find inflation the most critical issue at hand today.
Nearly everything has become more expensive in Canada, from food to real estate.
Like the rest of Atlantic Canada, Prince Edward Island has not been immune to these market conditions. But while rampant price inflation is a serious issue for both the eastern seaboard and the rest of the country, the last two years have also led to a broader economic boom.
A population surge, economic revitalization, and a red-hot real estate market – these are the gains that PEI and its regional neighbours have experienced throughout the COVID-19 public health crisis.
With PEI housing activity setting records, many Canadians wonder if it is now too expensive to live in the province. If inflation is the new normal in the major urban centres of Ontario or British Columbia, then why not in Atlantic Canada?
Atlantic Real Estate: Is it Expensive to Live in PEI?
The PEI economy has become diverse in recent years, blending the traditional resource sectors of agriculture and fishing with the growing advanced manufacturing and bioscience industries.
Put simply, PEI in 2022 is a mix of traditional and modern, rural and urban.
Employment opportunities are growing, people are flocking to the island, and PEI is one of Canada’s leaders in renewable energy.
What about housing?
This is the $64,000 question. Or, in PEI’s case, the $351,890 question, which is the average price of a home sold in January 2022.
The PEI real estate market has been sizzling for the last 20 or so months, with supply failing to keep up with the swelling demand.
According to the Prince Edward Island Real Estate Association, residential property sales increased seven per cent in January on a year-over-year basis, setting a new sales record for the month of January.
The average price of homes sold to end 2021 climbed 17.6per cent to nearly $352,000.
Inventory has been a critical issue in Prince Edward Island, much like the rest of the country. While the number of new listings rose slightly by 5.4 per cent year-over-year in January, with 155 new units hitting the market. Active residential listings dropped 6.5 per cent in January 2021, totalling 445 units for sale.
Months of inventory, which gauges the number of months it would take to exhaust current stocks at the present level of sales activity, were 2.9 – down from the long-run average of 12.9 months.
Despite the remarkable spike in housing prices, many Canadians continue to flock to PEI. In fact, according to the latest census data, the province is going through a notable population boost.
Is PEI the Most Attractive Place in Canada?
New data from the 2021 census show that PEI ranked as the fastest-growing province in Canada, with population growth hitting eight per cent since the last census in 2016. PEI edged out British Columbia as the fastest-growing province as the western province’s population increased 7.6 per cent.
Within Prince Edward Island, according to census statistics, the top five communities were:
- Cornwall: +22.9%
- North Shore: +16.2%
- Malpeque Bay: +15.6%
- New London: +15.2%
- Alberton: +13.6%
A senior research economist with the Atlantic Provinces Economic Council, Patrick Brannon, told CBC News that the growth is primarily due to migration, with young professionals and families moving from other provinces. This could sustain the economic boom transpiring.
At the same time, this can put pressure on regions, with possible impacts ranging from a lack of housing to a shortage of doctors and limited employment opportunities. Addressing these issues, he says, will be critical to retaining people.
“Housing is something most bigger cities in the country are dealing with. Charlottetown is no different. Housing prices are growing there very strongly. People are being priced out of the market, and even the apartment vacancy rates are very low,” he said.
“It’s tough, and that’s something that needs to be fixed, or it’s going to impact the flow of people into your province and retention rates.”
But new housing construction has been lacklustre over the last year. According to Canada Mortgage and Housing Corporation (CMHC), housing starts totalled 815 in 2021, sliding 3.3 per cent from the previous year. Housing completions were also down 11.87 per cent year-over-year, totalling 876 units.
This could sustain the seller’s market that has been ubiquitous in PEI, including Charlottetown. The RE/MAX 2022 Canadian Housing Market Outlook forecasts that Charlottetown real estate prices could advance 8.5 per cent to $409,207 this year.
While the province has yet to declare a housing affordability crisis like other places throughout the nation, PEI’s appeal could lead to more significant growth in several areas of the economy.