Toronto developers are expected to delay the launch of 10,000 condo units this year, as preconstruction condo sales plunge amid higher borrowing costs.

This is a sign that the broader real estate slowdown has spread to the preconstruction market, where purchases are seen as bets on future housing because buyers wait years for their properties to be built.

At the beginning of the year, when resale home prices were spiking, developers had planned to launch 35,000 new condo units in the Toronto region, according to data from condo research group Urbanation Inc.

But after a tumultuous five months where the Bank of Canada raised interest rates to 2.5 per cent from 0.25 per cent in an effort to rein in inflation, developers have scaled back plans.

Urbanation estimates that fewer than 10,000 units are now expected to launch over the next six months. In the first half of the year, about 16,000 units were brought to market. That means about 10,000 units have been shelved.

Preconstruction buyers, the majority of whom are investors, have been spooked by the jump in interest rates even though they do not immediately need mortgages when they buy preconstruction condos. Typically, a 20-per-cent down payment is required to secure a preconstruction unit. The buyer pays the remainder after the condo is built.

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