On February 12, the Canadian government closed a popular program which started in 1986, to lure Chinese investors to bring their millions into Canada. What was labeled as the Immigrant Investors Program (IIP) offered visas to business people with a net worth of minimum 1.6 million (cdn) who were willing to lend $800,000 (interest free!) to the Canadian government for investment across Canada for a term of five years.
Provincially, this program directly gave the BC government access to over $400 million in funding used to help replace schools and expand hospitals. This fund was also used to invest in local BC based businesses involved in the high-tech sector.*
Approximately 56,000 applicants, representing 7 years of VISAS, were cancelled and the program suspended indefinitely. In the same announcement, the Canadian government offered two new programs for applicants to apply under a new Immigrant Investor Venture Capital Fund or a business skill option - both to be launched later this year**
It is unknown if the government was directly trying to impact the housing market or if the announcement will have any impact at all. The government exerts that despite the millions of dollars in interest free loans, the immigrants under this program held very little ties to the country and were not major contributors to the economy - via taxes. In a press conference in Toronto, Citizenship and Immigration Minister Chris Alexander stated, "Citizenship is not a right, it is a privilege." A position that has been maintained in Ottawa, contributing to their decision early last week.***
The local housing market has been steady for the past 12 months. Both activity and price points have been consistent. Luxury detached home sales, sold at or above $2.5 million, represents 28% of sales in Vancouver in 2014. Luxury condominium/townhouse sales represents less than 1% of sale in Vancouver in 2014. Luxury homes for all properties in Vancouver represents 10% of the local housing market. What kind of impact do YOU think this announcement will have for Vancouver real estate.
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****statistics derived from MLS Sales 2014, YTD
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