Real es­tate rip­ples

High-priced homes most af­fected by clo­sure of PNP’s en­tre­pre­neur stream

The Guardian (Charlottetown) - - FRONT PAGE - BY STU NEATBY

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.”

STU NEATBY/THE GUARDIAN

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.

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