The Greater Toronto Area saw sales decline precipitously in July, as new housing measures meant to cool the market kept buyers and sellers on the sidelines, according to a new report.
The Toronto Real Estate Board released its July statistics on Thursday, announcing roughly 6,000 residential transactions last month, a 40% decline from July 2016. The average price for a home in the area hit $746,218, an increase of 5% from last year.
More:Canada’s Home Prices Soar by Double Digits
Ontario introduced housing market regulations in April to calm the overheated market in Toronto and the areas around Lake Ontario, measures that included a 15% tax on foreign purchases. The province has also introduced measures to boost the affordable housing stock and deter speculative buying.
Now, Toronto is now experiencing a sudden drop in activity akin to what Vancouver felt in the wake its own housing regulations enacted last year.
"Clearly, the year-over-year decline we experienced in July had more to do with psychology, with would-be homebuyers on the sidelines waiting to see how market conditions evolve," said Tim Syrianos, president of the board.
Detached houses saw the greatest drop in activity, with the total number of sales in July down by half, according to the report.
Meanwhile, activity for homes prices over $1 million saw a similar slowdown to the rest of the market, with transactions in July falling by 39% from a year ago. Activity fell 36% for homes prices over $2 million.
More:With New 15% Foreign Buyer Tax, Vancouver Sales Cool
John DiMichele, CEO of the real estate board, cautioned against drawing too much from summer market statistics.
"We generally see an uptick in sales following Labor Day," Mr. DiMichele said. "As we move through the fall, we should start to get a better sense of the impacts of the Fair Housing Plan and higher borrowing costs."