Foreign buyers looking to sell?

Fears that federal government's move to pull the plug on an incentive program attracting wealthy foreign property buyers to Vancouver and Toronto are indeed grounded, says one Chinese market analyst.

 

Ian Young, a past editor of South China Morning Post, points to March 2014 data suggesting that within weeks of Ottawa's cancellation of the Immigrant Investor Program (IIP), average prices for detached homes on the Lower Mainland dipped by 11 per cent from February 2014.

He and others are chalking the decline up to the loss of a program that helped wealthy Chinese nationals gain a foothold into Canada by gaining a foothold onto the Canadian property ladder.

 

Now, he says, "the fear among Chinese Realtors is that people will just liquidate their assets.

“Last year one of the top real estate agents in the city, who is Chinese, told me when this program ends she won’t be selling homes in Vancouver anymore.”

That analysis hasn't necessarily been met with fear on the part of Canadian buyers, many of who blame the IIP for the meteoric rise in Vancouver home prices in key neighbourhoods over the last five years.

 

In fact, many have seen the federal government move as answering the prayers of many B.C. residents and their real estate professionals with its move to put the kibosh on a controversial program tying immigration to investment.

 

Originally launched in 1986, the Immigrant Investor Program offered visas to foreign investors with a net worth of at least $1.6 million who were willing to lend $800,000 to the Canadian government for investment across Canada for a term of five years.

 

However, the program was temporarily halted in 2012. This was due to a huge backlog of applications from wealthy investors from mainland China hoping to immigrate to B.C. and actively invest in its real estate. Now, the federal government announced it will scrap the incentive outright, eliminating 59,000 applications backlogged worldwide.

 

Losing the foreign investors could potentially be damaging to B.C.'s real estate markets, particularly Vancouver, which is often reliant on interest from foreign buyers. This, in turn, could also be damaging to Vancouver's economy.

"When you suddenly stave off the intake of literally hundreds of millionaires in the Vancouver property market, prices can only go one way and that's down," immigration lawyer Richard Kurland told CBC News.

 

But the move is just as likely to help the market as hurt it, say Canadian property investors and homebuyers long concerned that wealthy foreign buyers have inadvertantly driven up prices, particularly on B.C.'s Lower Mainland and in Toronto.

This summer, the enormous flow of Chinese money into Vancouver real estate could quickly reverse with wealthy investors rushing to sell, according to the controversial analysis of an expert from Hong Kong.

Ian Young — former international editor of the South China Morning Post — has raised eyebrows both with his views on the impact of “Chinese money” on Vancouver’s real estate market, and his deconstructing of the common method of tracking prices for homes in Vancouver.

In a recent analysis, Young noted that in March 2014, just weeks after the federal government announced cancellation of the Immigrant Investor Program (IIP), average prices for detached homes in Greater Vancouver dropped by a monthly record of 11 per cent from February 2014.

Young says the IIP was “the most popular scheme in the world for millionaire migrants” from China to protect their wealth against fears of social and political upheaval at home.

It provided a cheap, risk-free, and almost guaranteed path to citizenship. But the backlogged list of 45,800 Chinese who applied to live in B.C. through the IIP contains a number of people that have already purchased in Vancouver, according to Young’s research.

“The fear among Chinese realtors is that people will just liquidate their assets,” Young said. “Last year one of the top real estate agents in the city, who is Chinese, told me when this program ends she won’t be selling homes in Vancouver anymore.”

The one-month plunge in March 2014, which was followed up by a small price drop in April according to Young’s data, came amid the most volatile three years of price swings in Vancouver’s history.

But this would be a shock to anyone outside the industry, Young says, because “raw” monthly price data aren’t reflected in the benchmark index that the Real Estate Board of Greater Vancouver publishes. - See more at: http://www.timescolonist.com/vancouver-real-estate-prices-to-slump-hong-kong-analyst-1.1080218#sthash.S5CtkM5u.dpuf
This summer, the enormous flow of Chinese money into Vancouver real estate could quickly reverse with wealthy investors rushing to sell, according to the controversial analysis of an expert from Hong Kong.

Ian Young — former international editor of the South China Morning Post — has raised eyebrows both with his views on the impact of “Chinese money” on Vancouver’s real estate market, and his deconstructing of the common method of tracking prices for homes in Vancouver.

In a recent analysis, Young noted that in March 2014, just weeks after the federal government announced cancellation of the Immigrant Investor Program (IIP), average prices for detached homes in Greater Vancouver dropped by a monthly record of 11 per cent from February 2014.

Young says the IIP was “the most popular scheme in the world for millionaire migrants” from China to protect their wealth against fears of social and political upheaval at home.

It provided a cheap, risk-free, and almost guaranteed path to citizenship. But the backlogged list of 45,800 Chinese who applied to live in B.C. through the IIP contains a number of people that have already purchased in Vancouver, according to Young’s research.

“The fear among Chinese realtors is that people will just liquidate their assets,” Young said. “Last year one of the top real estate agents in the city, who is Chinese, told me when this program ends she won’t be selling homes in Vancouver anymore.”

The one-month plunge in March 2014, which was followed up by a small price drop in April according to Young’s data, came amid the most volatile three years of price swings in Vancouver’s history.

But this would be a shock to anyone outside the industry, Young says, because “raw” monthly price data aren’t reflected in the benchmark index that the Real Estate Board of Greater Vancouver publishes. - See more at: http://www.timescolonist.com/vancouver-real-estate-prices-to-slump-hong-kong-analyst-1.1080218#sthash.S5CtkM5u.dpuf

Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate

Investment Hot Spots:
St. Anns, Newbrook, Blewett, White Point, Oliver Paipoonge

COMMENTS

Get help choosing the best mortgage rate

Just fill in a few details, and we'll arrange for a Mortgage adviser to help you find the best mortgage for your needs

  • How soon do you want a mortgage?
  • Name
  • Where do you live?
  • Phone number
  • E-mail address

Poll

Have your investment plans changed for 2017?