Fiona, lack of high-rise housing contributing to construction slowdown on P.E.I.

The value of building permits issued on P.E.I. is way down and so are housing starts. The Construction Association of P.E.I. says a number of factors are coming together to cause the decline.

The slowdown is not just in residential construction, with the value of building permits issued in the first half of the year down 24 per cent to $166.8 million.

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Some of that drop may be attributable to delays in issuing permits, but this is difficult to quantify.

The City of Charlottetown says its system does not allow it to track the size of the backlog.

The drop in housing starts is particularly concerning.

The provincial government has previously said P.E.I. needs 2,000 new housing units a year — a number the Island has never reached — to keep up with population growth, which is contributing to a housing crisis that dates back to 2019.

The province is currently working on new population projections based on higher than anticipated growth, a spokesperson told CBC News Thursday. But that the work is not yet finalized.

Not enough workers

While the construction industry has had some success in growing its workforce, the Construction Association of P.E.I. said it's still not enough given the demand.

"There are many big projects on the go at this time," said general manager Sam Sanderson.

"Industry has been working far beyond its capacity over the last few years. And you know what? They just can't continue on."

Those large projects include the UPEI medical school, a new sports complex in Charlottetown, and a manufacturing centre in the BioCommons Research Park.

In addition to reaching capacity in terms of workers available, the industry is also tapping out financially, Sanderson said. That's making it difficult to commit to new projects.

"There's many companies that are still waiting on payments and stuff from Fiona. Repairs and things like that," he said.

"That certainly has an impact, for sure. They've got a lot of money out on the table with materials and wages."

P.E.I. unattractive to investors?

With demand for housing high across the country, Sanderson said P.E.I.'s overall attractiveness as a place to invest in construction may also be a factor contributing to the slowdown.

Recent moves to control rent increases may be keeping out-of-province developers away, he said.

In addition, Sanderson said developers may be put off by difficulties in getting high-density projects approved. That type of housing can provide a better return on investment, he said.

"Density is definitely the key to it. Building up is the key to it. Urban sprawl costs money," Sanderson said.

"We have to really change the attitude of 'not in my backyard.' We're running out of land."

The P.E.I. government has been working on a housing strategy. That would include fulfilling a promise to eliminate the social housing registry by 2025.

The new strategy is due to be released this fall. Liberal housing critic Gord McNeilly said that's far too late.

"We asked for this two years ago in the standing committees," McNeilly said.

"The former minister said that housing starts would look quite a bit different in the spring, implying that there would be more housing. There isn't. Clearly that was just speaking notes. We didn't do enough."

This is a crisis created by this government, he said.