Once red hot, home sales in Canada fell sharply in June posting their biggest monthly decline in seven years.

Prices are still up compared to a year ago but they are falling on a month to month basis. In Toronto, one of Canada’s most frenzied market, lawmakers recently implemented a foreign buyer’s tax and that seems to have put the brakes on things.

CGTN’s Karina Huber reports.

Jennifer Issley and Chris Gayton have been actively house hunting in Toronto for six months. With a new baby, they are now looking for more space – a four-bedroom, three-bathroom home.

Despite a budget of $2 million Canadian – more than $1.6 million U.S. – Jennifer said the process has often left her in tears.

“When we first started, it was crazy,” Jennifer said. “So we would literally walk into a house and there was so much pressure. If we were interested in something, we’d have to put in an offer within an hour of seeing it because literally 10 offers would go in.”

Bidding wars were the norm. Homes would sell for tens of thousands of dollars over asking. In March, the average price for a detached house in the Greater Toronto Area (GTA) ballooned – approaching $1 million U.S. – an increase of more than 33 percent from last year.

The Ontario government was concerned. It swiftly implemented a 15 percent foreign buyer’s tax for the Toronto area and introduced more than two dozen other measures meant to increase affordability. The efforts seem to have worked.

In June, home sales in Canada fell 6.7 percent from a month earlier – their biggest monthly decline in seven years. In Greater Toronto, sales fell 15 percent on a month to month basis and prices were down almost 14 percent from their April highs.

“This is a combination of policy induced weakness and some payback for the strength we saw in the January to March period,” said Diana Petramala, an economist at TD Bank.

Petramala said the Bank of Canada’s decision in July to raise interest rates also helped cool down the market.

But Jason Mercer of the Toronto Real Estate Board believes the cool-down is only temporary.

“Our survey data suggests that there’s still a lot of households in the GTA that are upbeat about purchasing a home and so I expect that some of these people that are on the sidelines now will start moving back into the market as we head back into the fall and winter,” Mercer said.

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Robert McLister on Canada’s property market

CGTN’s Rachelle Akuffo spoke with Robert McLister, founder of RateSpy.com and a mortgage columnist at The Globe and Mail, about Canada’s cooling property market.