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Toronto's hot housing market is following Vancouver's lead and showing signs of slowing in the wake of tighter mortgage regulations from Ottawa.
August new home sales for the Greater Toronto Area came in at their lowest monthly level since 2009 and posted their worst showing on record, according to the Building Industry and Land Development Association (BILD), using data from RealNet Canada Inc.
A total of 1,242 homes were sold in Toronto last month -- a 64-percent decline from the same month last year. Both high rise and low rise sales are down across the GTA. High rise sales fell 67 percent to 645 from 1,967 in the same month last year, while low rise sales dropped 61 percent to 597 from 1,529.
BILD blames the slowdown in sales on tighter mortgage rules from Ottawa -- joining a chorus of real estate commentators that have said the new rules are having the desired impact of slowing the country's housing market.
"The federal government has been working on reducing household debt levels and recently adjusted mortgage lending rules. August was the first full month with the new rules in place and it appears these regulations have affected consumer confidence, resulting in significantly reduced sales of new homes," BILD president and CEO Bryan Tuckey said in a statement.
The data from BILD is the latest sign that the Toronto housing market is beginning to cool. Recent data from the Toronto Real Estate Board showed home sales in August fell 12.5 percent from last year, while the number of new listings was down 5.5 percent.
Vancouver -- considered at one point the epicenter of Canada's booming housing market -- has showed signs of a marked slowdown in recent months. The Real Estate Board of Greater Vancouver recently reported home sales plunged 30.7 percent in August from last year and were down 21.4 percent from July.
In July, Ottawa shortened the maximum mortgage amortization period to 25 years from 30 years and lowered the amount homeowners can borrow against their house to 80 percent from 85 percent, among other changes.
Finance Minister Jim Flaherty highlighted the Toronto condo market as a particular cause for concern.
"I have been listening to the market, and quite frankly I don't like what I hear ... Some calming of the market is desirable," Flaherty said at a new conference announcing the changes. "In Toronto in particular what I've observed and heard about from developers is continuous building without restriction because of persistent demand. This concerns me because it's distorting the market."