by Al Campbell
VANCOUVER, Feb. 20 (Xinhua) -- Canada's recent cancellation of its Investor Immigrant Program would have little initial impact on Vancouver home prices and could strengthen the country's most expensive property market in the long term, realtors and analysts said Thursday.
Last week, Canada scrapped the program under which wealthy individuals could buy permanent residency by making an 800,000 Canadian dollars (730,897 U.S. dollars) interest-free loan to the government of the province where they intended to reside, excluding Quebec. They also needed to prove they had a net worth of 1.6 million Canadian dollars.
Considering the relatively inexpensive price of gaining entry into the country, one whose living standards are consistently ranked among the highest in the world, a backlog of 66,000 applicants had built up before Ottawa froze the national program in 2012 on concerns about its benefits.
With Hong Kong's South China Morning Post newspaper reporting about 40,000 of those applicants would have been Vancouver-bound over the next six years, local realtors are taking a wait-and-see attitude about how it will affect the real estate market.
In the coming weeks, Canada will introduce a new federal pilot program outlining the requirements for a new batch of prospective investor immigrants.
"Over the short term, you may see somewhat of a hiccup in the market place if you take out that kind of volume (of potential buyers)," said Paul Eviston, a veteran realtor who has worked in the Vancouver market for nearly 30 years.
"But there's no question, once the new program is implemented, that long term the effect is going to be extremely positive, and you're going to see different types of buyers coming in," he said.
"You're going to see the very high end of the market is going to become higher end and you're probably going to see some of the mid-range market will not have the same upward mobility that it has had over the last three to five years," Eviston said.
Walking through a 13-room, 6-million-Canadian dollar house nearing completion in West Vancouver, realtor Paul Zhang said the effects of the changes in the Investor Immigrant Program on the market were "mostly psychological."
He felt the program was scrapped mainly because of the huge backlog of applications and the new pilot program would target higher-net worth individuals.
"It seems like we're looking for, or the country is looking for, people that are going to contribute more to the society. So in essence I really believe that people, even with probably more wealth, or more substance, will choose to settle here," he said.
According to the Multiple Listings Service, whicht tracks home sales in the Vancouver area, the average re-sale price of a single-family dwelling in the city in December was 1.47 million dollars. Re-sale townhomes averaged 700,000 dollars, while wood-frame condominiums were the cheapest at an average of 365,000 dollars a unit.
Such homes are mostly at the lower end of the price scale, while real estate analyst Alec Zhang said the cancellation of the Investor Immigrant Program would, in the immediate future, largely affect the prices of high-end homes, those 3 million dollars and higher, in areas popular with Chinese buyers.
"It means that the market won't be so active because they (home buyers) are afraid that no more Chinese rich people will come over to Canada, but that is the wrong idea," he said, predicting the market would be unsettled for "no more than three or four months maximum."
"Later on, after everybody has understood the government policy issues, they are just trying to switch from A policy to B policy, and then everything is fine. So it (the market) will come up a little bit, pick up," he said.
Regardless of whether a high-net worth foreigner gains Canadian citizenship or not, the real estate analyst, whose customer base is 70 percent mainland Chinese, was confident the buyers would still be there in the Vancouver market.
"There's also local people who have their own market demand, in addition to lots of Chinese students studying here," he said.