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Sales of luxury properties have tumbled in Canada’s two largest housing markets, the latest sign that the party is over when it comes to rapid price gains, according to Royal LePage.

The high-end segment is a good indicator of the mood in the broader housing market in the Greater Toronto Area and Greater Vancouver, providing a gauge into consumer confidence from luxury to entry-level homes, said Phil Soper, Royal LePage’s chief executive officer.

“Median prices are hanging on for now, but if this dramatic drop in demand were to continue, prices would definitely fall,” Mr. Soper said in an interview, noting that the sales slump follows a series of government policies aimed at corralling runaway markets.

The Toronto Real Estate Board said the price for all detached houses in the GTA has already fallen, averaging $1,030,103 in April, down 14.4 per cent from a year earlier.

In the Vancouver region, the price for all detached houses averaged $1,658,958 in April, down 6.1 per cent from the same month in 2017, according to the Real Estate Board of Greater Vancouver.

The GTA saw the number of high-end detached houses sold in the first quarter of 2018 drop to 90 transactions, down 68 per cent when compared with 281 sales in the same period last year, Royal LePage said.

Greater Vancouver’s sales of luxury detached properties declined to 55 transactions in the first three months of this year, down 38.2 per cent from 89 deals in the first quarter of 2017.

Mr. Soper forecast a 3-per-cent decline in Greater Vancouver’s median price for luxury detached houses in 2019 compared with 2018, while the GTA’s median price is expected to be flat.

To qualify as a luxury detached property under Royal LePage’s formula, the minimum amount is $3,046,206 in the GTA and $4,630,147 in Greater Vancouver – at least three times the median price. For condos, it’s a minimum of $1,454,446 in the GTA and $1,926,084 in Greater Vancouver.

Ontario’s 15-per-cent tax on foreign home buyers took effect in April, 2017, applying to the Greater Golden Horseshoe Region − a sprawling land base that surrounds and includes the GTA.

In British Columbia, the province raised the foreign-buyers tax to 20 per cent from 15 per cent three months ago, while expanding that tax beyond the initial target of the Vancouver region. B.C.’s NDP minority government also introduced other measures designed to cool off the housing market, including new taxes on properties assessed at more than $3-million.

Federally, Canada’s banking regulator implemented a stress test on Jan. 1, 2018, making it tougher for buyers to qualify for mortgages.

“It has thrown sand into the gears of the normal housing cycle,” Mr. Soper said, adding that the GTA’s sales of luxury condos declined 28.2 per cent in the first quarter of 2018 compared with the same period last year, while Greater Vancouver saw a 26.5-per-cent decrease.

Justin Fung, a Vancouver-based co-founder of Housing Action for Local Taxpayers (HALT), said a different metric – average prices – shows a softening market in general in the Vancouver region.

Mr. Fung said that while there are homeowners upset with B.C. Premier John Horgan’s government for imposing new taxes on properties assessed at more than $3-million, the affordability crisis lingers.

In some neighbourhoods on Vancouver’s west side, a $3-million house appears to be relatively modest, he said. “People have different perceptions of how rich they are. But if you think about what a $3-million home looks like in other Canadian cities, you would be living in a palace,” Mr. Fung said.

Royal LePage’s survey of luxury detached houses shows a median price of $5,792,941 in the first four months of 2018 in Greater Vancouver. That compares with $3,522,117 in the GTA, $1,990,184 in Calgary, $1,569,515 in the Montreal area and $1,537,107 in Ottawa.

“We are in a situation where Vancouver homeowners are lottery winners and others are not,” Mr. Fung said. “The housing crisis has created difficulties for renters and young people trying to stay here.”

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