Effect of the Immigrant Investor Visa Program in BC
The Government of Canada announced earlier this week that they were eliminating the Immigrant Investor Visa Program designed to fast track immigrants their Permanent Residency in Canada, if they offered a $800,000 interest free loan to the Province of their choice, and for many Mainland Chinese Immigrants, BC – specifically Westside Vancouver, West Vancouver and Richmond – was their top choice. This Immigrant Visa program allowed these wealthy immigrants to purchase Real Estate in BC, which many believe is one of the major causes of the high cost of Real Estate in Vancouver (thanks to stronger demand for property from a higher number of wealthy people).
After a review of the Immigrant Visa program, it was discovered that of the 59,000 pending applications – 45,000 of them were from Mainland China, most of whom decide to reside in Vancouver and the surrounding area. In the last few years, this has led to an increase in the number of wealthy Buyers purchasing Real Estate in Vancouver, West Vancouver and Richmond, thereby driving up the prices with interest and Buyers. Many Vancouver residents can’t compete with wealthy Immigrants in terms of the Real Estate Market, especially now that Vancouver is the second least affordable city in the world based on Median Income vs Median Property Prices (least affordable city is Hong Kong).
If the End of the Immigrant Visa Program will Affect Kitsilano Real Estate
There’s much speculation at this point, but one thing to consider is that a majority of the Westside of Vancouver, Richmond, West Vancouver is supported by these Mainland Chinese Buyers. If it does affect the Kitsilano Real Estate Market, it will be seen in the trickle down effect. Most of the “Off Shore” Buyers buy the most expensive property in Vancouver (including West Vancouver), allowing those Sellers to buy other property, which then allows those owners to buy something else, and so on… This could lead to less activity in the Vancouver Real Estate Market, and less activity could lead to some decline in Kitsilano home prices. How much of a decline? Short term or long term? Will it effect older Kitsilano homes or new builds? We’ll have to keep our eye on the market.
Kitsilano has always remained a fairly steady market thanks to it’s lifestyle and amenities so I don’t expect to see much difference in the market. There are still a significant number of Buyers out there looking for Kitsilano homes.
The new condo market is also heavily supported by “Off Shore” Buyers who purchase pre-sale units in new developments to either hold as investments or rent out. This new condo market not only supports the development of the new towers, but leads to a busy construction industry, which helps the local economy. Kitsilano has a few new condo developments in the works that will serve the young professional population and heavy UBC student influence, so it will be interesting to see if this market stalls, or if it will find enough Buyers to sell out the condo (for example, Pinnacle on Broadway still has units that have yet to be sold by the Developer). Hopefully Condo Developers will re-focus their attention on building affordable units for the current Vancouver population.
Interestingly, in the last few years the Government put a hold on new Immigrant Visa Program applications, yet we’ve still seen an increase in the Vancouver Real Estate Market.
Also, though the Government is ending the Immigrant Visa Program, they are initiating two other programs with different criteria (business investment and job skills), meaning there will still be new immigrants coming to Vancouver. The Vancouver Real Estate Market is not as temperamental (and “ready to burst”) as many people believe, especially Kitsilano which remains one of the Westside of Vancouver’s top neighbourhoods for lifestyle, schools, and style of homes.
The Vancouver Real Estate Market is busy right now with lots of interested Buyers ready to move. Along with the Government’s changes to Property Transfer Tax for First Time Home Buyers, we should see a strong Spring Market.