Real estate ripples
High-priced homes most affected by closure of PNP’s entrepreneur stream
Since September, realtor Khoi Dao says he has noticed a change in the economic confidence of recent immigrants to Prince Edward Island.
Dao, who works with Royal LePage, believes changes introduced to the provincial nominee program (PNP) may be having a ripple effect on the Island’s real estate market. In September, the province announced it would be closing the entrepreneur stream of the immigration program. Dao believes the changes, which spell uncertainty in terms of when new immigrants might obtain their permanent residency status, has fuelled a sense of unease from recent newcomers, who might otherwise be ready to purchase a home. Dao believes some new immigrants are unwilling to invest in a home without the assurance they will be able to remain in Canada.
“I talk to a lot of Vietnamese, a lot of newcomers. The mindset is changing because now they cannot buy,” Dao said.
“Now they don’t know. I think now they would look for something they can rent.”
Khoi believes this may increase pressure on P.E.I.’s already depleted rental market. The entrepreneur stream of the PNP had allowed new immigrants who were approved for the program to obtain permanent residency prior to arriving on the Island, as long as they paid a deposit of $200,000, which was held in escrow by a provincial crown corporation.
The program has been a magnet for political controversy for years.
In September, the province said it would do away with the escrow model but said entrepreneur immigrants would be permitted to apply to a work permit stream instead. This stream will allow applicants to receive permanent residency after investing in local businesses and residing on P.E.I. for one year.
Other local realtors downplayed the impact the changes have had on the overall real estate market but acknowledged the market for higher-end properties may be affected.
Greg Lipton, president of the P.E.I. Real Estate Association, said he has noticed a slow-down in sales of homes valued above $500,000 since the PNP changes in September.
“A lot of those higher ends have reduced their prices already,” Lipton said.
“I have one client that, the first house they bought here was $825,000. And now, here they are, it’s almost 10 years now, they are wanting to sell it and they’re not finding any buyers.”
Lipton said newcomers who arrive under other immigration streams that are designed to attract skilled workers — as opposed to entrepreneurs — will likely buy homes at a price closer to the average, likely in the $250,000 to $350,000 range.
Joel Ives of Century 21 in Charlottetown said high-end properties constitute a relatively small component of the housing market. He said the number of homes sold valued at over $500,000 on P.E.I. grew from 12 in 2013 to 31 in 2018. However, the total number of homes sold across P.E.I. in 2018 was 2,739.
Data collected by the P.E.I. Real Estate Association shows that total home sales in 2018 were down 4.6 per cent from 2017 but were still above the 10-year average.
However, the supply of homes for sale in P.E.I. has been dropping significantly over the last three years, fuelled in part by a growing population. Supply levels for 2018 are at the lowest levels seen in the last 16 years.
“We had a fairly booming market for a while and then we just kind of ran out of stuff to sell. Now most of the stuff we have would be above the average price,” Ives said.
Aili Guo of Exit Realty said she has noticed concern amongst recent newcomer clients because of changes to the PNP. But she doubted the changes would have a significantly negative effect on the housing market.
“In the short term, people may be more hesitant to buy because they will be looking at the market to see how it goes. But for a longer term, it wouldn’t be so negative because actually for those people who are coming under the work permit (stream), they would be more willing to buy,” Guo said.
“People are still very positive about the market.”
Khoi Dao, a realtor whose clientele includes many P.E.I. newcomers, says changes to the Island’s PNP may be having a negative impact on the real estate market. Dao believes the number of immigrants now looking to rent will increase pressure on P.E.I.’s rental market.