P.E.I. house prices up double digits for 3rd year in a row

A rapid increase in P.E.I. house prices means renting is no longer a phase in life for many Islanders, says the P.E.I. Fight for Affordable Housing.

The benchmark price for houses, using an average of monthly prices as measured by the Canadian Real Estate Association, was up 16.8 per cent in 2022. That followed a 24.8 per cent increase in 2021, 10.0 per cent in 2020, and is part of a trend going back to 2015.

"A lot of people have been put in the situation where they have to rent because they're just completely priced out of the possibility of owning a home," said Cory Pater, a volunteer with the P.E.I. Fight for Affordable Housing.

In 2014, the benchmark house price on P.E.I. was the lowest among the provinces and had been increasing only modestly in the previous decade.

P.E.I. benchmark prices rose from $123,533 in 2005 to $154,367 in 2014. That 25 per cent increase was the lowest increase among the provinces. Over the same period national prices were up 73 per cent.

But prices on the Island started accelerating in 2015 and the story flipped. By 2022 the benchmark price was $353,308. That 129 per cent increase was the highest among the provinces. Nationally prices rose 97 per cent.

Over the course of those years, P.E.I. house prices rose above the benchmark in Newfoundland and Labrador, New Brunswick, Winnipeg and Saskatchewan.

In the meantime, wages on P.E.I. remained Canada's lowest.

In order to put this in perspective, CBC P.E.I. has created a home ownership affordability index, which is equal to the benchmark price for houses divided by average annual earnings. Put another way, it is a measure of the number of years it would take the average earner to make the money equal to the cost of a house at the benchmark price.

From 2014 to 2022, P.E.I.'s affordability index rose from 5.02 to 7.65. That 52 per cent increase is slightly under the national average of 58 per cent, but that number is brought up by a very large increase in Ontario, where the index rose 77 per cent.

National affordability numbers are skewed by Ontario and B.C., where the indexes are 15.51 and 16.72 respectively. Looking at how the provinces rank puts P.E.I. in a much worse position.

In 2014 only Nova Scotia and New Brunswick had lower indexes than P.E.I. In 2022, only B.C., Ontario and Quebec were higher.

It also worth noting how quickly that change has happened. Virtually all of the change in the P.E.I. index has come since 2020. Until that point, wages were largely keeping up with increased house prices. But from 2020 to 2022, the index rose 50 per cent, the biggest increase in the country for those two years.

Increases in rents on P.E.I. go back further than the increases in house prices.