In its recently tabled budget, the Federal Government effectively cancelled a program, the Canadian Immigrant Investor Program (IIP), which afforded wealthy prospective immigrants access to fast-tracked immigration. The program, which began in 1995, allowed immigrants with $1.6 million or more in assets (the amount was increased from $800,000 in 2010) to make an interest free loan to the Canadian government of $800,000 for a period of 5 years in return for Canadian citizenship. At the end of the five-year term, the principal of the loan was returned.
The IIP was a popular avenue for those with significant wealth to immigrate to Canada. An average of 7,100 people entered through the program each year from 1995 to 2012. Traditionally British Columbia has been a popular final destination, with an average of 3,300 immigrants locating in BC since the program’s inception. That number peaked from 2008 to 2010 at approximately 5,650 but slowed to just 2,600 in 2012 as new applications were halted while the Federal Government determined the future of the IIP.
It is important to note that these numbers include all members of the household, and so to get a more accurate estimate of the number of new household formations, it is common to divide the total number by the average immigrant household size. Therefore, we estimate that an average of 1,200 households per year located in BC through the IIP from 1995 to 2012, with that number climbing to 2,100 during the peak years of 2008 to 2010 and falling off to 1,430 in 2011 and just 979 in 2012. Data available for 2013 indicates a similar number of immigrants through the IIP as in 2012.
The impact of the IIP on the economy and the housing market of British Columbia as a whole is relatively insignificant. At its peak, immigration through the IIP represented only 13 per cent of total immigration to BC, and most years it has been less than 10 per cent. That said, the impact of 1,200 to 2,100 new millionaire households settling each year in select Vancouver neighborhoods has likely been a factor in rising single-family home prices in those areas, though far from the most important factor. If there is any impact from the Government’s decision, we anticipate it will be contained to the very high-end of the real estate market. Notably, we have not observed an uptick in inventories in those areas most impacted by the IIP, even as immigration through the program has dropped by half.
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Copyright British Columbia Real Estate Association. Reprinted with permission.