Vancouver's property moguls are in a tailspin following this week's federal budget decision to cut off the valuable Immigrant Investor Program that has proved hugely popular with wealthy Asians looking to move to Canada.
The scheme offered visas to business people with a net worth of at least $1.6 million who were willing to lend $800,000 to the Canadian government for a period of five years. It proved so popular that the Canadian government froze all applications in 2012 to try and clear the massive backlog. There are still some 59,000 applications unprocessed that will now be declined with all monies refunded.
News that the program is to be axed has raised some uncomfortable questions in the Lower Mainland, as pundits scramble to figure out just how much fuel the system added to the ever-rising local property market.
Immigration lawyer Richard Kurland told the South China Morning Post that he thought the government had thrown "the baby out with the bathwater" and that a better way forward would have been to improve the scheme, rather than scrap it completely.
He expects there to be a dramatic effect on the local real estate market, with the luxury end being most under threat.
"The immediate impact is a heads up to Vancouver real estate agents, who have to expect a reduction in demand for top-end properties," he told the newspaper. "Until the 'for sale' signs pop up on Vancouver lawns like mushrooms, then the locals won't twig to what is going to hit."
In an interview with The Vancouver Sun, Kurland noted the possibility that a new program may yet be put in place, with the price of admission being raised from $800,000 to something closer to $2 million.
Vancouver's "condo king," developer Bob Rennie, also thinks a fix is likely in the works, telling Metro News that he foresees a tightening up of residency requirements.
Rennie cautioned against overstating the effects the news will have on the Vancouver property market, noting that the sales likely to be affected would be in the $2.1 million-and-above category.
“The statistic that you should know is from 2006 to 2012, 69 per cent of all home sales in Greater Vancouver have been to people that already own a home,” he said. “Only 31 per cent of sales have been to first-time buyers, or new immigrants from offshore, so 69 per cent of the market is pretty stable.”
Realtor Lorne Goldman told CTV News that the market may wobble in the immediate aftermath of the decision, but he wasn't worried about the long term.
“This is a blip and Vancouver will get over it. It’s still a great place to live and people will still want to come here,” he said. “There might be a slight slowdown in the super high end of the market for a few months until it sorts itself out.”
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