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Will house prices on PEI drop in 2024?

New home construction

The Canadian real estate market is in a constant state of flux, reflecting a plethora of influencing factors from interest rates to immigration. In recent times, while the national housing prices experienced a dip—primarily due to a slump in Ontario—the situation in Prince Edward Island (PEI) seems to be on a different trajectory.

The past few years, particularly post-COVID, have seen unprecedented turns. We witnessed soaring prices in 2021 with buyers aggressively competing for the scanty inventory available. Recent data from the Canadian Real Estate Association (CREA) indicates that while the prices have not returned to their peak, they are steadily rising again. The whirlwind of the last three years leaves everyone wondering: What lies ahead for the next five?

In PEI, the starter home prices in 2023 usually hover between $300,000 and $350,000. This reflects a significant jump from a decade ago when they averaged around $200,000. There’s no evident decline on the horizon.

A concerning aspect for potential homeowners is the disparity between housing prices and average household incomes. To get approval for a $350,000 mortgage, one might need a pre-tax income nearing $90,000, provided they have minimal other debts. Unfortunately, many PEI households fall short of this mark, with the rapid rise in housing prices far outpacing average income growth. The P.E.I. Real Estate Association reveals that while the benchmark house price almost doubled from $150,025 in 2013 to $298,600 in 2021, the median household income saw a mere growth from $64,400 to $72,000 in the same period.

This has led potential buyers to seek homes in more rural areas. The stats are revealing: incomes on P.E.I. increased by a modest 11.9% over nearly a decade, while housing costs skyrocketed by 99%. With these numbers, first-time buyers, especially, are in a tough spot, seeking assistance that’s often just out of reach.

Further complicating the scenario is the unpredictability of mortgage rates. The Bank of Canada’s overnight interest rate has been on an uphill climb. Starting at a modest 0.25% in early 2022, it skyrocketed to 4.75% within a year and a half, marking a two-decade high.

The lack of housing inventory exacerbates market imbalances. Coupled with uncoordinated policy measures and a lagging supply of new housing, this has driven prices to record highs. PEI’s construction industry struggles to match the pace of its booming population. A recent Statistics Canada report confirms that PEI and Alberta jointly lead in population growth rates, with the Island’s population surpassing even the government’s revised projections. The glaring mismatch between housing demand and actual construction is evident as the industry could only manage 123 housing starts in the first quarter of 2023.

PEI’s impressive growth rate, largely driven by immigration and interprovincial migration, poses significant challenges. Although the P.E.I. government’s population growth strategy initiated in 2017 has led the country in numbers, it has also brought about pressing issues, notably the housing shortage.

In conclusion, given the influx of people, the disparity between income and house prices, and the limited inventory, it seems improbable that house prices on PEI will drop in 2024. Predicting the next five years with certainty is challenging, but current trends point towards continued high demand and soaring prices. As always, it’s advisable to consult a local REALTOR® for insights specific to one’s locality and needs.

Ron Barrett - Century21 Northumberland - PEI Realtor


I am Ron Barrett, co-owner and broker at Century21 Northumberland Realty. I and my team of 30+ professional real estate agents would be pleased to help you with all your Prince Edward Island real estate needs. I can be reached at 902.888.7238 or ron@century21pei.com