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Risk of speculation in Toronto condos mitigated by presales: CMHC

Most Toronto condominium projects do not begin construction until 70 per cent of units are sold, curbing the risk of speculation, Canada’s housing agency said recently in a report that suggested overbuilding fears may be overdone. A prolonged Canadian housing market boom, particularly in the two major markets of Toronto and Vancouver, has sparked fears of a bubble. Condo construction has jumped in both cities to meet the demand of buyers priced out of more expensive detached homes. But the Canadian Mortgage and Housing Corp report noted 79 per cent of projects begin construction after reaching 70 per cent presale threshold, and that current unsold inventory is largely concentrated in downtown Toronto and the suburb of Markham, where condo markets are more active. The CMHC, which has played down the likelihood of a national bubble while flagging what it sees as overbuilding and overvaluation in some cities, said condos account for about 50 percent of residential construction in Toronto

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