Vancouver's real estate market is expected to feel the effects of the end of Canada's investor visa program.
Feds drop program that they argue "undervalued Canadian permanent residence," but real estate agents worry how it might affect housing sales
Vancouver real estate prices may not plummet but they are expected to take a hit now that the federal government has officially dismantled the Immigrant Investor Program.
The program, launched in 1986, allowed overseas residents with cash and a willingness to invest it in Canada a shortcut into receiving their immigration papers. Experts say the program bolstered the Vancouver housing market with money largely from wealthy Chinese investors.
“For decades, it has significantly undervalued Canadian permanent residence,” said Finance Minister Jim Flaherty in his budget speech Tuesday, announcing the end of the program. “There is also little evidence that investors as a class are maintaining ties to Canada or making a positive economic contribution to the country.”
For $1.6 million, of which $800,000 was a loan to the government, immigrants under that category got fast-tracked into becoming citizen.
“Everyone is slightly in shock,” says Jason Soprovich, a real estate agent in West Vancouver. “Basically that’s a significant number of people who invest equity into this market. We’re now going to find out how much that’s going to be a factor. Vancouver’s market is definitely a multicultural investment pool and this is absolutely going to have ramifications.”
The government says the outcome of the investor program hasn’t paid off for Canada. Immigrant investors pay significantly lower taxes over a lifetime than other categories of economic immigrants and report employment and investment income below Canadian averages.
Senior economist Robin Wiebe with the Conference Board of Canada conducted a statistical analysis last year that showed a correlation between China’s economic health, such as a rising GDP, and Vancouver’s housing market. In all the speculation leading up to the budget, Wiebe says he heard no indication that the government was going to scrap the program, but thinks the local market can’t help but be affected by fewer investors buying up Vancouver real estate.
“In every federal budget there is a series of trade-offs and presumably they looked at their basket of revenue and expenses and said, Let’s keep this and get rid of that. It’s horse-trading and this program wasn’t important enough to keep.”
Immigration lawyer Mona Chan says immigrant investors on the wait list are going to be frustrated by the decision, which sees all 59,000 backlogged applications scrapped. But overall, she thinks the change is a good thing for Canada and for B.C.
“This is a healthy move. It will hurt a little bit: some banks will say they’re not seeing the numbers they used to see, people selling cars and real estate are going to lose some business,” she says. “But in the long run, we’re going to have people here who want to stay here for the long-run.”