nOTTAWA (Reuters) - Toronto home sales plummeted in August from a year earlier and prices were down more than 20 percent from April as government moves to cool a long housing boom in Canada’s largest city continued to douse demand, data showed on Wednesday.
Sales fell 34.8 percent month from August 2016, the Toronto Real Estate Board (TREB) said in a report. It was the fifth straight month of declining sales after a years-long boom that sparked fears of a bubble.
While prices were up 3.0 percent compared with a year earlier, according to the group’s home price index, they were down 1.8 percent from July as both sales and new listings fell, TREB said.
The average selling price for all home types combined was C$732,292 ($591,273), down 20.3 percent from a peak C$919,086 in April.
The Ontario government introduced multiple measures in late April, including a foreign buyers tax, in a bid to cool the housing market in Toronto and the surrounding areas.
While most data has shown foreign buyers represent only a small portion of buyers in Toronto, TREB said the government move sparked a shift in sentiment.
“If current conditions are sustained over the coming months, we would expect to see year-over-year price growth normalize slightly above the rate of inflation,” the board’s director of market analysis, Jason Mercer, said in a statement.
New listings fell 6.7 percent from a year earlier, while active listings were up 65 percent as properties sit on the market for longer.
The dramatic shift in the Toronto market comes as the Bank of Canada has begun what most analysts believe will be a gradual process of raising interest rates from near historic lows.
The central bank raised its key rate by 25 basis points to 0.75 percent in July and markets expect at least one more hike before the end of the year, possibly later on Wednesday.
Some experts have said low rates have encouraged consumers to take on too much debt and fueled the housing boom.
Reporting by Andrea Hopkins; Editing by Richard Borsuk