Could scrapped immigrant program drop Vancouver home prices?
The federal government’s decision to scrap a program that gave rich immigrants a fast track to citizenship could cause a drop in the price of high-end homes, according to local realtors.
In the 2014 Federal Budget, Ottawa announced it will cut the controversial immigrant investor program which accelerated the process for those who could give the government an $800,000 loan.
About 3,000 families a year come to B.C. every year through the program, according to immigration lawyer Richard Kurland.
“That means no more 3,000 buyers of new residential high-end real estate in Vancouver. That’s going to have a dramatic effect on the demand for housing,” Kurland said. “When prices fall at the high end, it percolates down the system to medium and low-end residential property in Vancouver.”
The question remains as to how much local housing prices could be affected.
“Any time there’s a reduction in demand, that isn’t great for the real estate market,” said realtor Lorne Goldman.
But Goldman said he doesn’t expect fewer high-end home buyers will mean much for the city’s real estate market.
“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.”
According to the government, the program just wasn’t working.
“Research shows that immigrant investors pay less in taxes than other economic immigrants, are less likely to stay in Canada over the medium-to-long term and often lack the skills, including official language proficiency, to integrate as well as other immigrants from the same countries,” Citizenship and Immigrant Canada said in a statement.
But some are still concerned about what the move will mean for them.
Calvin Ng of Calvin and Collin Construction said that 70 per cent of his clients are Chinese investors, while the other 30 per cent are local.
“Of course, [it’s] not good for construction. Not only for us,” he said. “I’m just concerned for housing market.”
In a statement, the government said it will replace the IIP with “more focused and effective pilot programs that will ensure that immigrants who come to Canada deliver meaningful benefits to our economy.”
Other countries like the U.K., Australia and New Zealand also offer immigrant investor programs but require as much as a $5 to $10-million loan and don’t offer up-front permanent residency.
According to the government, immigrant investors pay nearly $200,000 less in income taxes than federal skilled works and $100,000 less than a live-in caregiver.
With a report from CTV Vancouver’s Mi-Jung Lee