Vernon Clement Jones
Other
Fears that federal government’s move to pull the plug on an incentive program attracting wealthy foreign property buyers to Vancouver and Toronto are indeed grounded, says one Chinese market analyst.
Ian Young, a past editor of South China Morning Post, points to March 2014 data suggesting that within weeks of Ottawa’s cancellation of the Immigrant Investor Program (IIP), average prices for detached homes on the Lower Mainland dipped by 11 per cent from February 2014.
He and others are chalking the decline up to the loss of a program that helped wealthy Chinese nationals gain a foothold into Canada by gaining a foothold onto the Canadian property ladder.
Now, he says, “the fear among Chinese Realtors is that people will just liquidate their assets.
“Last year one of the top real estate agents in the city, who is Chinese, told me when this program ends she won’t be selling homes in Vancouver anymore.”
That analysis hasn’t necessarily been met with fear on the part of Canadian buyers, many of who blame the IIP for the meteoric rise in Vancouver home prices in key neighbourhoods over the last five years.
In fact, many have seen the federal government move as answering the prayers of many B.C. residents and their real estate professionals with its move to put the kibosh on a controversial program tying immigration to investment.
Originally launched in 1986, the Immigrant Investor Program offered visas to foreign investors with a net worth of at least $1.6 million who were willing to lend $800,000 to the Canadian government for investment across Canada for a term of five years.
However, the program was temporarily halted in 2012. This was due to a huge backlog of applications from wealthy investors from mainland China hoping to immigrate to B.C. and actively invest in its real estate. Now, the federal government announced it will scrap the incentive outright, eliminating 59,000 applications backlogged worldwide.
Losing the foreign investors could potentially be damaging to B.C.’s real estate markets, particularly Vancouver, which is often reliant on interest from foreign buyers. This, in turn, could also be damaging to Vancouver’s economy.
“When you suddenly stave off the intake of literally hundreds of millionaires in the Vancouver property market, prices can only go one way and that’s down,” immigration lawyer Richard Kurland told CBC News.
But the move is just as likely to help the market as hurt it, say Canadian property investors and homebuyers long concerned that wealthy foreign buyers have inadvertently driven up prices, particularly on B.C.’s Lower Mainland and in Toronto.
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