Housing crisis, labour shortage at odds in P.E.I.'s population strategy

After a pandemic-induced slowdown in 2020, P.E.I.'s population has resumed growing at a record-setting pace – and there are signs housing in the province can't keep up.

Statistics Canada's latest population estimate for the Island is 167,680.

The province added 4,817 people in 2021 — the biggest population increase in more than 50 years — and estimated growth in the first half of 2022 has already outpaced last year's.

That growth is no accident. It's the result of a five-year strategy aimed at increasing the population, and reversing the province's aging population.

"If you don't try to solve that aging demographic issue … it's only going to get worse over the next decade," said APEC economist Fred Bergman.

But the growth has come with a cost.

Not enough homes

Population growth was identified as a factor in P.E.I.'s housing crisis as early as 2019.

A study by the City of Charlottetown found housing construction slowed as the population started growing. That study found the roots of the housing crisis went back to 2014 and 2015, when a number of factors contributed to a construction slowdown.

When the province's population began to grow with the introduction of the provincial population strategy in 2017, the construction industry ramped up to build new housing. But it's struggling to keep up.

The number of housing completions more than tripled to almost 1,400 last year, up from a low point under 400 in 2015, according to Statistics Canada.

But with population growth at almost 5,000 in 2021, there's still a massive shortfall.

The average P.E.I. household, according to the 2021 census, is made up of 2.3 people. Assuming that's the case, those 1,400 units would house an estimated 3,200 people. That still leaves a shortfall of 1,800 people, or about 780 housing units.

Housing shortfall not new

This broad analysis, notes Bergman, doesn't take into account that some population growth doesn't require new housing.

When a child is born, for instance, the parents likely already have housing lined up. Alternatively, someone returning from work out of province may have a household to come back to.

But by this analysis, the shortfall in housing is adding up quickly.

In the five years leading up to 2021 only in 2020, when migration to the Island was slowed by the pandemic, was housing construction able to keep pace with population growth. From 2016 to 2019 the province saw a shortfall of more than 7,000 housing spaces, or more than 3,000 housing units.

The province's apartment vacancy rate follows the same trend, falling to 0.3 per cent in 2018 before rising to 2.6 per cent in 2020, only to fall back again to 1.5 per cent last year.

Where the people are coming from

So who are these new Islanders, and where did they come from?

The province started talking about a demographic shift in 2016, facing an aging population with virtually no growth.

"We witness too many younger Islanders leaving the province for education and work," noted the throne speech in April of that year.

"Sustainable economic growth relies upon the ability to increase our population, expand our skills, and grow our workforce."

The population strategy released in 2017 aimed to increase the population by 2,000 people a year — reaching 160,000 in 2022 – by increasing immigration and attracting people from other provinces to the Island.

The strategy, as it turns out, was successful on both fronts. By 2021 the province was growing at more than twice the planned rate.

P.E.I. had already begun to ramp up immigration: it doubled the number of new Canadians it was bringing in to about 2,300 a year. Even in 2020, at the height of the pandemic, immigration was higher than it had been in 2015.

Interprovincial migration has seen an even bigger surge.

From 2013-15, P.E.I. had a net population loss of hundreds a year from interprovincial migration. 

In 2016 the province more or less broke even, and the net gain has grown since — even in 2020. In 2021 alone, interprovincial migration contributed a population increase of almost 2,000.

Between 2018 and 2021, P.E.I. increased the number of people moving here from six of the other nine provinces. The number of people moving from Ontario alone almost doubled in that time period to 3,305.

Population getting younger, slowly

While there are clear signs the province is feeling the strain of the current rate of growth, Fred Bergman said the rationale for growing the population in the first place remains.

"You've got to be careful not to ease off too much because you still have that risk of labour shortages," he said.

While the province has been able to successfully grow the population, turning the tide on the aging population hasn't been so easy.

In 2015, 62.2 per cent of the population was between the ages of 18 and 64 — what might be considered the peak working years. As the population grew, it fell to 61.5 per cent in 2019, before slowly rising back to 61.6 per cent in 2021.

As the economy pulled out of the pandemic, the province has been hit with severe labour shortages, with unemployment falling to a record low on the Island in June.

"We're starting to put a dent in that, and you've got to keep going," Bergman said.

But just bringing people here isn't enough, he said.

"You definitely want housing, because otherwise you're not going to keep them in the long run."

A new strategy

That five-year growth strategy introduced in 2017 expires this year.

In an email to CBC News, the Department of Economic Growth said the government is working on a new plan, and noted Economic Growth Minister Matthew MacKay addressed the idea of a new plan in the legislature in late March.

MacKay praised the foresight of the previous government for bringing the plan forward, but said there have been lessons that would be considered in a new plan.

"We need to look further out," said MacKay.

"The new strategy, once we do look at it, we need a 20-year vision. We need to look at what this is going to look like as far as our housing, our education, our infrastructure system. So, that's what my focus is going to be."

The new plan is under development and is expected to be discussed by the legislature's standing committee on economic growth in early September.