Photo: Martin Cathrae/Flickr
While plenty has been written about the GTA’s notoriously hot housing market, Ontario isn’t the only province industry players should be watching this month.
According to Scotiabank economists Marc Desormeaux and Mary Webb, the Prince Edward Island housing market has been tightening for months.
“Consumer spending and housing activity…are the main drivers of the Island’s real GDP growth, reflecting the recent population and employment upswing,” write the pair, in a recent note.
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PEI had a banner year in 2017, with employment rising 3.1 per cent, while household incomes jumped 7.2 per cent.
“Over the next two years, job creation on the Island is forecast to ease to a more sustainable pace, and retail sales will continue to advance,” write the pair.
Housing starts around Charlottetown jumped a whopping 70 per cent last year, as home sales and average prices surged 3.8 and 12.4 per cent, respectively. That’s the biggest price gain since 1996.
“In the past two years, Charlottetown received almost 90 per cent of the Island’s newcomers, pushing down the city’s vacancy rate to a record low of 0.9 per cent in October 2017,” write the pair.
The province is also expected to avoid the correction that many other markets are experiencing as the result of a new mortgage stress test.
“In other provinces, a greater correction is anticipated…given the recent tightening in national mortgage regulations and the forecast rise in interest rates,” they write.
So what’s on the horizon for the province’s housing market? Further tightening, according to Desormeaux and Webb, who predict that slowing housing starts and rising demand could create a supply shortage in coming years.
“The tightening housing market and household formation trending higher suggest upside risk exists on our forecast of a gradual slowing in housing starts this year and next.”