Summerside PE, Feb 13th 2023: Per the recently enacted legislation of January 1, 2023, “Prohibition on the Purchase of Residential Property by Non-Canadians Act” (PPRPNCA), S.C. 2022, c.10, s.235, on behalf of the membership of the Greater Summerside Chamber of Commerce, we wish to voice concern. We feel that the Act’s blanketed approach applies a disproportionate penalty to the smaller markets of Summerside and Charlottetown, Prince Edward Island.
The legislation is intended to restrict foreign investment in residential rental/income properties, and aspires to cool the strong housing market in Canada, thus creating more inventory for local market participants. While we agree in principle with this concept, the result has already been achieved through the federal policy of increasing interest rates, and structurally through an induced slowing of the economy. Prince Edward Island does not participate in foreign direct accommodation investment, as is found in other Census Metropolitan Areas (CMAs) such as Toronto and Vancouver.
The challenge of the Chamber’s argument is the arbitrary inclusion of Prince Edward Island’s two cities (Charlottetown and Summerside) in the legislation mandate, and the inclusion of other smaller communities not normally covered by the CMA definition. A CMA is defined as a community of between 50,0000 and 100,000 persons. According to the 2021 census, Charlottetown’s population was 38,809 and Summerside’s was 18,157. Applying even an aggressive population-growth multiple, these two Prince Edward Island cities could not achieve the CMA threshold definition.
Considering the 2006 reclassification of CMAs and Census Agglomerations (CAs), the definition of a CA constitutes at least 50,000 people residing in an urban core. This is not the case in either provincial city captured in the PPRPNCA legislation.
Further, we wish to draw attention to the scope of catchment for both provincial
cities. In the case of Summerside, the catchment far exceeds the municipal boundaries and still only encompasses 18,938 people. More pronounced is the unrealistic CA catchment of the entire center population of the province. The population of 86,865 is shown in Charlottetown’s catchment, in an effort to make it fit within the CA definition, and is greater than 50% of the entire population of the province of PEI. The categorization of Prince Edward Island’s Census Agglomerations is factually inaccurate.
When considering the federal government’s fiscal and monetary policies, the housing market is already dramatically slowing. This slowing is unrelated to the implementation of the PPRPNCA legislation, which will not be reflected for some time . According to the Prince Edward Island Real Estate Association, the total number of homes sold is down 38.6% year-over-year from January 2022, and 20.7% below the five-year average. The dollar volume of transactions is down 36.2% from January 2022, while the median price has also fallen.
Further, this policy is unnecessarily obstructing, and is causing great strain to Provincial Nominee applicants who are in Prince Edward Island under multi-year work permit commitments, with the goal to be nominated and obtain Permanent Residence in PEI with their families. These applicants struggle to find rental accommodation (due to a tight rental market and record low vacancy rates) and are now restricted from home investment due to a misapplied policy. The PPRPNCA legislation seems counterproductive to the federal government’s stated intention to bring more newcomers to Canada, especially to smaller areas such as PEI.
The Greater Summerside Chamber of Commerce is requesting an immediate reversal of the home ownership legislation which ramifications will cause great potential harm to the PEI economy, at a period where Prince Edward Island is already in a phase of rapid slowing due to other government impacts. We request an immediate re-evaluation and reclassification of Prince Edward Island’s affected communities and a relaxation of the unmerited constraint placed on the housing market.