Already-low P.E.I. vacancy rate slashed in half in just 1 year

The apartment vacancy rate on P.E.I. continued its downward slide in 2022, falling from 1.5 per cent in 2021 to 0.8 per cent a year later.

The Canada Mortgage and Housing Corporation (CMHC) released its rental market survey for 2022 on Thursday, reflectingconditions prospectivetenants were facing in October.

Nationally, for apartment units other than condominiums, the vacancy rate fell to its lowest level since 2001, reaching1.9 per cent.Prince Edward Island's vacancy rate was less than half of that.

"We definitely have it much worse in the region compared to the national average," saidKelvin Ndoro, senior analyst of economics at CMHC.

He said that with single-family homepricesand mortgage ratesincreasing, "inthe past year, we saw sales drop all across the country, so it's getting more difficult for young people...to get into home ownership. That's added pressure on the vacancy rate and in turn, [it's] increasing rental prices."

Some categories of apartments were even more rarely availablethan others on the Island. The vacancy rate for apartments with three bedrooms or more was 0.5 per cent, and the report shows no vacancies at all for bachelor apartments.

Vacancy rates on the Island hit their all-time bottom in 2018, reaching 0.3 per cent. By 2020, they had climbed up back up to 2.6 per cent before fallingmore than a percentage point in 2021 and then again last year.

The relative easing of the market in 2020 was connected to a slowing of migration into the provinceat the height of the COVID-19 pandemic, when international newcomers were all but shut out of Canada and non-residents of P.E.I.needed permission to enter the province.

Population growth on the Island, at just over 4,000 in 2019, shrank to half thatin 2020. In the meantime, the construction industry was buildingmore housing: About 1,800 new units became available for rent in 2019 and more than 3,000 in 2020.

But both trends saw a reversal in 2022.

The industry completed just 1,266 units in 2022. In the meantime, the population, as measured from October to October, grew by almost 6,300. With an average household size of 2.3 people on P.E.I., those new units represented space for an estimated 2,900 people.

"P.E.I. is leading the country in population growth, like it has for the last few years," Ndoro said.

"Pandemic restrictions, increase in mortgage rates, interest rates, inflation and so forth inflation in P.E.I. is the highest in the country kind of slowed construction a bit, whichwould explain the drop in vacancy rates that we saw."

Population growth on P.E.I. has been roughly evenly split between interprovincial migration and immigration to Canada in recent years.