Homes in Charlottetown and surrounding areas have experienced average price increases in the first quarter of 2019, with severely low inventory pumping the brakes on residential sales.
Overall, Atlantic Canada is poised for strong housing market performance in 2019 as economic performance ramps up, unemployment rates decline, and first-time buyer incentives at both provincial and federal government levels take hold, according to the RE/MAX 2019 Atlantic Canada Housing Market Report. The report found strong momentum in the larger urban centres, as well as spillover into several smaller markets. Home sales are on par or up in just under half the markets surveyed (7/15), likely due to the current shortage of inventory, while housing values have climbed in almost three-quarters (11/15) of the Atlantic Canadian markets surveyed.
Housing Activity in Charlottetown
Home sales are down 13 per cent to 74, falling short of the 85 unit sales reported during the same period in 2018. Average price has climbed to $275,472 in Q1, rising just over five per cent from year ago levels. The Provincial Nominee Program introduced a number of years ago and designed to attract foreign investment has been behind the Island’s surging population and contracting real estate market. The immigration wave bolstered PEI’s economic growth, which peaked in 2017 at 3.5 per cent. GDP growth has been more tempered in 2018 and that trend is expected to continue with the recently announced end to the program’s entrepreneur stream. The program is expected to be reintroduced when the Island is better prepared to accommodate the massive upswing in population.
At present, less than six months of housing inventory exists in Charlottetown and vacancy rates (for rentals) have dropped to less than one per cent. Empty-nesters and retirees are having a difficult time downsizing, and as a result, are staying in their homes longer. With fewer homes listed for sale, ideal first-time buyer properties have experience strong upward momentum. In Greater Charlottetown, that momentum has translated into $75,000 to $100,000 price hikes in a short period of time, with Sherwood, East Royalty, West Royalty, Stratford and Cornwall experiencing the greatest appreciation. Homes under $200,000 remain elusive, with first-time buyers forced to consider other options including half duplex’ for under $100,000 and housing on rented lots (which present challenges in terms of financing).
For those in the market, especially if they have sold their home, market conditions are not ideal. Choice is rarely an option and buyers need to act quickly to secure housing. Days on market sit at 38, down from 66 this time last year. While there are properties available for sale over $500,000, demand at higher price points is limited. Some buyers are getting creative and expanding their search to communities within 30 minutes of Charlottetown such as Summerside and Kensington. With several rental buildings slated for completion in Charlottetown this summer, more inventory is expected to come on-stream, taking some of the pressure off rising prices. By year-end 2019, some correction is anticipated for Charlottetown’s residential real estate market, with both home sales and average prices forecast to soften.
Atlantic Canada Housing Market Highlights
- First-time buyers were a driving force in almost 70 per cent of markets surveyed. (10/15)
- Low inventory levels were reported in 80 per cent of markets. (12/15)
- Home sales were strongest at starter price points ranging from $100,000 to $300,000.
- Buyers from other parts of the country were active in 60 per cent of Atlantic Canada housing markets. (9/15)
- Newfoundland and Labrador and New Brunswick are seeing an influx of people returning home after working in Alberta’s oil sector.
- Luxury sales were up in Halifax-Dartmouth, Saint John and Kings County.