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PEI supply glut to lead to slower construction

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Prince Edward Island’s housing starts are expected to decelerate in the very near future, amid an especially large inventory.

“In 2020 and 2021 we expect starts to trend lower,” CMHC senior economics analyst Kelvin Ndoro told CBC News.

“Currently there’s an excess of housing starts,” he added. “When deviations between actual and fundamental levels are high or positive, this gets resolved very quickly in the short term, and that’s by housing starts declining.”

Coming after several years of considerably strong growth, the slowdown will be in the immediate wake of a likely record level for the market this year, Ndoro added.

The markets observer noted that the outsized pace of building stemmed from relatively low vacancy rates along with rising home prices, which exhibited a 38.5% increase in Charlottetown over the last two years. Construction activity will soon cool down as a result of this bloated supply, however.

The Charlottetown intensification is especially noteworthy, with the market now seeing more frequent bidding wars.

“It does happen, no question,” Century 21 and Colonial Realty broker/owner Joel Ives said earlier this year. “People are banging on doors, saying ‘I really like your house, are you interested in selling?’ And some people say ‘yes, maybe we are if the price is right.’”

With an average home price of $277,000 as of mid-year, competition has become heated in the $250,000 to $350,000 price bracket.