Tuesday, February 18, 2014
Feds end cash-for-visas program
A new concern among the country’s high-end markets, especially Vancouver, is the federal government’s cancellation of the Immigrant Investor Program in the budget last Tuesday. Under the cancelled program, wealthy foreigners with at least $1.6 million in assets could gain Canadian residency by lending the government $800,000 for five years. Most of the applicants under the program were Chinese—45,000 of the pending 59,000 applications, according to a Hong Kong paper cited in a Forbes article.
The government’s rationale for killing the investor visa program was that those taking advantage of it have not contributed significantly to Canada. In fact, the government says that immigrant investors pay much less income tax than other Canadians and were Canadian in name only.
However, those wealthy investors did buy a lot of real estate. One realtor estimated that about 35 per cent of homes worth $2 million and over in Vancouver were bought by the foreigners. Without those buyers, will the luxury home market wither? A realtor from Vancouver told CBC news that most of the buying in that market is from the wealthy Chinese. If they can no longer come to Canada, “we have killed 80 to 90 per cent of the buying in West Vancouver.”
Others disagree. The B.C. Real Estate Association said in a report released today that the only impact they foresee is “less pressure” on detached homes in West Vancouver. The average price for a detached home jumped from $748,651 in January 2013 to $812,536 last month. Less pressure would be a distinct advantage.