As reported by Romana King for MoneySense
, PropertyGuys.com founder and chief analyst Walter Melanson stated that Canada could serve as a haven for investors fleeing from the Old World.
“We don’t want to scare money out of Canada, but the feds need to figure out where they want foreign investment and then build those incentives,” Melanson said.
Canadian housing markets apart from Vancouver and Toronto—which are expected to remain overheated due to the low interest rates that would ensue from Brexit—can also be built up to attract overseas investor interest, the analyst stated.
“If this foreign money is spent with an investment thesis that has little to do with rental income or future appreciation then these investors don’t care if they purchase a $1 million property in Vancouver or five properties in St. John’s, Newfoundland worth $1 million. They just want the stability that Canada’s real estate has to offer when parking their money,” Melanson explained.
On the other side of the Atlantic, Melanson predicted that the Brexit polls would have a moderating influence on British property prices.
“Foreign investors may see this as another example of buying a good investment as a cheaper price. Much like the speculators who bought when the U.S. housing market took a 50% dive, this same style of buyer may see this as an opportunity to get into the London market,” he said.
A few days before the referendum, Finance Minister Bill Morneau advised Canadian individuals and businesses with assets in the U.K. to begin enacting their plan Bs, as they might experience headwinds due to Brexit’s impact on global finance.
The U.K.’s departure from the EU means that it would need to re-negotiate a new and separate trade agreement with Canada, a tortuous process that could take years, if not decades.
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Last week’s Brexit poll that led to the U.K.’s withdrawal from the European Union has sent uncertainty reverberating through the world’s markets, but an industry analyst argued that any shockwaves would only be temporary, and that the Canadian real estate sector can actually leverage the utterly changed global financial landscape to its advantage.