Non-residents of Prince Edward Island can buy real estate on the Island but there are some restrictions. In general, you can purchase property that is 5 acres or less in size, and up to 165 feet of water frontage. Anything over those limits will require government approval.
Housing prices in PEI tend to be far below the national average. In 2010, the average price of a home in PEI was just under $160,000, while the national average across Canada was about $330,000. The province collects a 1% Real Property Transfer Tax, which is tacked onto the selling price. First-time home buyers are exempt from this tax.