On Tuesday, Finance Minister Jim Flaherty announced the 2014 budget which highlighted the end of the Immigrant Investor Program and what many believe is relief to an overheated Vancouver housing market.
Introduced in 1986, the Immigrant Investor Program is a cash-for-visa deal: if you have more than $1.6-million, then you loan Ottawa $800,000 interest-free for five years. In exchange, the immigrant investor and their family receive resident visas and are later allowed to apply for Canadian citizenship.
By 2012, the program was temporarily frozen as there was a huge backlog of mainland Chinese citizens hoping to come to Vancouver. Now the program is scrapped along with the 59,000 applications backlogged worldwide.
As a result, the prices in Vancouver could potentially come down slightly. Some investors may not be lining up for new condos or rich properties, since they can no longer count on the mainland Chinese investor to come swoop up property. The high-end real estate market is particularly vulnerable to price decreases.
This is a welcome change for locals who have long wanted to get into the local housing market, however, due to the surge in property values, they have been unable to do so.
Still, many believe this will have little to no impact on the housing market. Even with the investor program frozen for the last two years, housing prices continued to remain stable amidst a shaky global economy.
At the end of the day, it comes down to more than just wealthy immigrants purchasing the properties in Vancouver. Many have been passed down generation to generation while others seek financial assistance from their families to purchase a home in the city.
There are plenty of local millionaires (and not just on paper) that are willing to snap up properties in Vancouver.
Image: Vancouver Aerial image via Shutterstock