Photo: James Bombales
The P.E.I. housing market has been on a roll for months, and June was no exception, with new housing investment passing the $20 million mark for the fourth time in nine months.
The province saw $22.3 million invested in new property in June, a whopping 50 per cent year-over-year increase. Housing investment was up 50.7 per cent in the first two quarters of 2018 in comparison to 2017.
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The surge was led by the apartment sector, which saw a massive 220.4 per cent year-over-year increase. Single home investment was up 32.5 per cent, while investment in semi-detached homes rose 54.6 per cent.
Economists have been tracking the province’s progress for months, with Scotiabank economists Marc Desormeaux and Mary Webb noting that the market was beginning to tighten in a note earlier this year.
Housing starts around Charlottetown jumped 70 per cent last year, as home sales and average prices surged 3.8 and 12.4 per cent, respectively.
“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 Desormeaux and Webb.
The province has also largely managed to avoid the correction that many other markets are experiencing as the result of a new mortgage stress test, which came into effect January 1.
“In other provinces, a greater correction is anticipated…given the recent tightening in national mortgage regulations and the forecast rise in interest rates,” write the pair.
So what’s on the horizon? 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.”