There's a looming possibility that Canada could receive a sudden influx of Hong Kong residents, and it could have implications for fragile housing markets like Toronto’s.
In addition to 300,000 Canadian passport holders presently living in Hong Kong, many of whom intend on moving to Canada, Immigration, Refugees and Citizenship Canada (IRCC), which is welcoming 1.2 million immigrants between this year and 2023, has also cleared the pathway to citizenship for many more.
A year ago, the IRCC announced a three-year work permit for Hong Kong residents who were educated at Canadian post-secondary institutions in the last five years, as well as that it was loosening entry restrictions with the eventual goal of permanent residency for Hong Kong residents who have worked for at least a year in Canada.
“Those programs were introduced in response to what’s going on politically in Hong Kong,” said Warren Chan, an immigration lawyer with Warren Chan Professional Corporation. “The programs themselves seem to be created to encourage younger Hong Kong residents rather than people who are 60 or 70 because there are certain requirements about graduating within five years of the date they apply for the program.”
Chan added that most of the inquiries he’s received are from people under the age of 40. Asked how many expressed trepidation about Mainland China’s intrusion into Hong Kong, Chan said, “It’s hard to get answers on that because a lot of people are afraid of even communicating by email or phone if they’re in Hong Kong. People are hesitant to be so direct when they’re explaining their motivations for leaving Hong Kong, but I think its fairly obvious: it’s a combination of security and the future prospects of the city, and then there are also things like the cost of living there, which is expensive.”
Chan added that he’s received inquiries from people who would like to take advantage of the IRCC’s program to bolster their education credentials, but he also mentioned that, as is customary in Hong Kong, they value real estate.
“That would translate to when they arrive here, I’d say.”
COVID Restrictions Have Led to Delays
Isaac Quan, Managing Broker at Living Realty Downtown, says Canadian passport holders have been held up by China’s strict COVID travel restrictions, but as soon as they ease, the inflow will begin, adding that it will put upward pressure on real estate prices.
“Over $40 billion in funds were transferred from Hong Kong to Canada [in 2020], and a lot of that money will be going into real estate,” he told STOREYS. “The real estate market will be impacted quite a bit with this influx of Hong Kong people. It’s an influx, but a gradual one, that will have quite a bit of velocity. A lot people had a five- to 10-year plan and now, anecdotally, I’m hearing three to five years.”
Mainland China’s security law, which, among other things, criminalizes Hong Kong’s secession, subversion of the state, and colluding with foreign agents — and which touched off months of protests that made headlines around the world — is the impetus for people fast-tracking plans to leave Hong Kong. China is supposed to assume full control of Hong Kong in 2047, twenty-five years from now, but many interpret the controversial security law as China bidding to do so much sooner. An influx of Mainlanders into Hong Kong has been an additional source of tension.
Quan held seminars in Hong Kong half a decade ago, selling preconstruction projects in Toronto, and noted they would sell out. But today he says there are sold-out immigration and real estate seminars every day of the week.
Vancouver, a Pacific Rim city, has traditionally been more popular than Toronto with people from China’s mainland and Hong Kong, but Canada’s largest city has more to offer economically, Quan says.
“Toronto has better jobs, better markets, better fintech companies, all the big banks are here, great universities are here, there’s a bigger population, and Toronto is the financial hub of Canada,” he said.
Quan says a better term than ‘influx’ is ‘inflow,’ which he anticipates will not start until COVID-19 restrictions are lifted in Hong Kong in another year or two. Currently, a prospective buyer would have to fly to Toronto to physically inspect their new home and surrounding neighbourhood, including the schools, but upon flying back to Hong Kong they would have to quarantine in a hotel for 21 days at their own expense.
Canada issued a record 401,000 permanent resident cards last year, and intends to welcome 411,000 immigrants this year and 421,000 in 2023, all of which is putting pressure on the country’s housing supply, and Quan wonders if it will be able to support the inflow of Hong Kong residents.
“I’m not an economist but there’s not enough supply in the market, and with so much demand coming in, the majority will settle in Vancouver and Toronto, where it’s already the most expensive,” he said. “You already have 28 or 50 offers for your home in front of you, but when people from Hong Kong, who are used to exorbitant prices, come over, they will probably outbid a lot of local buyers and it will make the prices a lot higher for buyers.”
"Little Observable Impact on the Market"
However, Norman Xu, a broker with Royal LePage Signature Realty in Toronto, doubts migration from Hong Kong will be disruptive, especially because it will be so gradual. Xu also suspects that people might erroneously blame migration from one part of the world for rising housing prices when, in actuality, a cluster of factors are responsible.
“Even if it’s 300,000 people from Hong Kong who come to Canada, only if all of a sudden they came all at once, that would have a little bit of an observable impact on the market,” said Xu, who leads The Norman Team.
He added that overall immigration have a bigger impact.
“The general immigration goal is bigger than the number of passport holders in Hong Kong. I don’t think one specific factor like that is going to be a game changer for the whole market,” Xu said.
Quan says that with China’s official takeover looming in 25 years — although it appears the mainland is in no mood to wait — the situation is dire and people are looking to flee while they still can.
“A lot of my clients have grown up in Hong Kong with their traditions and culture, they speak English and Cantonese, but now that China is taking over more of the culture, education system and jobs, Hong Kong residents are feeling left behind and that’s adding to their woes,” Quan said. “We talk about affordability in Toronto but it’s probably 20-30 times worse in Hong Kong."
