By Frank O'BrienWed Feb 12, 2014 11:10am PST

The death of Canada's controversial investor visa scheme will have an immediate effect on Vancouver's high-end housing market and could be the first step in a move to restrict real estate speculation by offshore buyers, according to real estate insiders.

In Tuesday's federal budget, Canada announced it is scrapping the program, which has allowed waves of wealthy Chinese (and others) to immigrate to Canada – mostly to Vancouver - since 1986.

The announcement was made in Finance Minister Jim Flaherty's federal budget, which was delivered to parliament February 11. Tens of thousands of Chinese millionaires in the queue will reportedly have their applications scrapped and their application fees returned.

"It will have a definite impact on the market," said Jackie Chan, an agent with Dexter Associate Realtors on Vancouver's tony West Side, who once worked with Canada Immigration in Hong Kong.

Chan said end of the program will cool sales at the higher-end of the Vancouver market, "anything over $7 million."

The federal government had frozen applications to the immigrant investor program in 2012.

The day before Flaherty's budget announcement, a South China Morning Post investigation revealed there was a backlog of more than 45,000 rich Chinese waiting for approval of their applications to move to British Columbia as of January 2013. They were estimated to have a minimum combined wealth of $12.9 billion.

Census data shows 96% of all recent Chinese immigrants to British Columbia live in Metro Vancouver and the proportion among the wealthy is even higher.

Under the former Canadian rules, principal applicants worth a minimum of $1.6 million had to loan the Canadian government $800,000, interest-free, for five years. They and family members could then apply for citizenship.

According to Flaherty's statement, "In recent years, significant progress has been made to better align the immigration system with Canada's economic needs. The current immigrant investor program stands out as an exception to this success. For decades, it has significantly undervalued Canadian permanent residence, providing a pathway to Canadian citizenship in exchange for a guaranteed loan that is significantly less than our peer countries require," it read.

Vancouver real estate consultant Ozzie Jurock, former president of the Canada-Taiwan Trade Association, was not surprised by Flaherty's decision to kill the program. Jurock believes it is just the first shoe to drop in a federal move to curb foreign speculation in Canadian real estate. "This is the first shot," Jurock said, "The second will be some sort of tax on foreign real estate investment, or outright ban or restrictions on foreign investment like in Australia."