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Despite signs of cooling housing market, Toronto developers keep building

Construction work being done on a condominium construction site at Bathurst Street and Fork York Blvd. in Toronto on May 29, 2012.

Deborah Baic/Deborah Baic/The Globe and Mail

What cooling housing market?

Toronto developers appear to be forging ahead with new projects, according to data from Statistics Canada released Tuesday, despite some signs the housing market is cooling, particularly for condos.

Toronto was one of the few cities in Canada to show a gain in the number of residential and other building permits in June – mainly a result of a rise construction permits for new homes of all sorts, including semi-detached, row houses and single homes.

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The number of building permits for all dwellings in Toronto has increased 141.7 per cent from June 2011 to 4,421. Permits got a 48.4-per-cent bump in June from the previous month, when the number of permits also rose 21 per cent. But May and June, 2012, saw the only increase to Toronto building permits this year.

At the same time, other signs indicate the Toronto condo market is finally taking a breather. Condo market research company Urbanation released data last week that showed there were a record high 18,123 unsold units at the end of the second quarter and sale prices were growing at their slowest pace since the end of 2010.

This is good news for policy makers. Both Federal Finance Minister Jim Flaherty and Bank of Canada Governor Mark Carney have pointed a finger at Toronto's condo market, saying it's overheated and could be headed for crash. Mr. Flaherty recently told The Globe and Mail's editorial board that he has spoken to developers who say as long as there are buyers, they'll just keep on building.

"It will lead to a crash," Mr. Flaherty said.

In the condo market specifically, a record 343 new condo buildings are currently under construction. During the second quarter alone, developers started construction on 7,343 units. Perhaps as prices cool, the number of new developments will slow to reflect that, but for now, developers still see money in new buildings.

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