The changes has made developers and investors skittish, as developers are now holding back new project launches and have taken a wait-and-see approach in the face of Toronto's softening market and climbing inventory of condos for sale - which are not selling unless people lower the prices.
A total of 2,728 new units were sold up to the end of March of 2013, down 29% just from the final three months of 2012. That's less than half the 6,070 units sold in the first quarter of 2012 when the condo market was starting to wobble and fall from a record year of sales — 28,190 units — in 2011.
Meanwhile Toronto's inventory of unsold condo units in new projects climbed during Q1 to 18,845 units, a 21% jump over a year ago.
Most of those unsold units, about 64 per cent, are in buildings still in the pre-construction sales phase, meaning they have yet to be built - which means the investors and developers would end up losing money if the projects are cancelled.
So far there hasn't been a collapse in prices, but that is likely because the volume of condos on the market has yet to dramatically increase. The sudden increase will happen in late 2014 - and by 2015 we can expect a collapse in condo prices as the market becomes flooded with cheap condos which were purchased by foreign investors with the intent to flip them for a profit.
But since those investors borrowed money from investment banks - and banks will want their money back - the investors will need to sell for less than their asking prices when the banks start demanding their share.
In which case we will see economic chaos on the level of what happened in the USA in 2007-2008 - except this time in Canada and any places that used bank money for gambling on Toronto's future condo prices.