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The downtown Vancouver skyline.DARRYL DYCK/The Globe and Mail

Home prices in the Vancouver region are falling after months of declining sales, signalling the end of an unprecedented housing boom that began in mid-2013.

Prices had been on a tear from the summer of 2013 until August this year. Sales volume set a record high this past March, but starting in April, the number of existing properties sold has decreased month-over-month.

The sales slowdown has now translated into lower prices. The downturn is a sharp contrast for real estate agents who had grown accustomed to bidding wars and seemingly never-ending price spikes. Amid the dwindling sales, the reversal in prices is welcome for first-time buyers hoping for even modest relief in their bid to enter Canada's most expensive housing market.

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Sales for all housing types decreased to 2,233 properties last month, down 38.8 per cent from October, 2015, according to the Real Estate Board of Greater Vancouver.

The industry's benchmark price, which represents typical properties sold, has slipped 1.5 per cent over the past two months to $919,300 in October in Greater Vancouver for detached houses, townhouses and condos. The price reached a record high of $933,100 in August.

"To have a strong market, you need those first-time buyers coming in," board president Dan Morrison said in an interview. "There is a holding pattern, and people are trying to figure out how policy changes are going to impact them."

The B.C. government implemented a 15-per-cent tax on foreign buyers in the broader area known as Metro Vancouver, effective Aug. 2.

Ross Kay, founder of Ross Kay Realty Consultants, calculates that the average price for detached properties sold in Metro Vancouver from Aug. 2 to Oct. 31 dropped to $1.36-million, down 11.2 per cent from $1.53-million for Jan. 1 to Aug. 1.

Effective Oct. 17, the federal government tightened mortgage rules, adding a new standard for gauging whether buyers can handle an eventual increase in interest rates. Ottawa also closed tax loopholes used by some foreign investors, effective on Oct. 3.

Jock Finlayson, executive vice-president of the Business Council of British Columbia, said low interest rates, limited housing supply and robust demand internationally and locally contributed to record prices in the Vancouver region earlier this year.

"The foreign-buyer tax was designed to discourage demand, and it appears to be working," he said. "Whether this is a long-term drop in foreign demand or whether we're in an adjustment period, it's too early to say."

In the seven weeks leading up to the tax's implementation, foreign buyers accounted for 13.2 per cent of the region's total, according to the B.C. government's data based on land-title registrations. During the two-month period after the tax was introduced, foreign purchasers accounted for only 1.3 per cent of the total number of deals closed and registered in Metro Vancouver.

Mr. Finlayson said the federal government's tightening of mortgage lending rules last month will make it especially hard for first-time home buyers in the Vancouver region and the Greater Toronto Area.

"As an an economist, it is concerning to see markets in Metro Vancouver and the GTA, both of which I would describe as out of control," he said.

There were 652 sales of detached houses last month in Greater Vancouver, down 54.6 per cent from a year earlier. The region's benchmark price for detached houses reached $1.55-million in October, down from the record high in August of $1.58-million, said the Greater Vancouver board, which revised data from September.

The cooling market in the Vancouver region does not mean bargains, however.

National Bank Financial Inc. said the metropolitan area of Vancouver is by far Canada's most expensive housing market. Saving enough for a 20-per-cent down payment on a recent median price of $1.2-million for detached homes and townhouses in the Vancouver region would take nearly 36 years based on median household income, according to National Bank economists Matthieu Arseneau and Kyle Dahms.

The economists warn that high prices in the Vancouver region and the Greater Toronto Area are unsustainable. "Markets where home buyers are more heavily indebted are more vulnerable," Mr. Arseneau and Mr. Dahms said in a new study on Wednesday.

Some industry observers say the Vancouver region and the GTA could both face a sales slowdown in 2017, although the GTA is expected to remain a hot market through the end of this year. In B.C.'s Fraser Valley, however, sales on the multiple listing service are already tumbling. The Fraser Valley Real Estate Board said sales of detached houses in its territory plunged 45.3 per cent in October, compared with a year earlier.

On Tuesday, Toronto-Dominion Bank raised its prime rate for variable-rate mortgages to 2.85 per cent from 2.7 per cent.

"We believe TD's rate increase may be just the first move in a series of mortgage rate increases," RBC Dominion Securities Inc. said in a research note.