The most expensive housing markets in Canada and Toronto experienced their poorest annual sales in at least ten years. What’s to blame? Stricter mortgages rules and a spike in borrowing costs. 

Toronto’s Real Estate Board (TREB) reported 77,426 total transactions, a drop in 16% which further led to the average price falling to $787,300. Ontario’s capital hasn’t seen such bad sales numbers since 2008—while Vancouver’s annual sales plummeted 32% to 24,619. Vancouver experienced its worst year since 2000 and was 25% below the 10-year average.

Garry Bhaura, president of the TREB, attributes the huge hike in borrowing costs and stringent mortgage stress tests to the slowdown in the housing market in Canada.

Vancouver and Toronto felt the brunt of the government’s legislation of tougher qualifying rules for mortgages in the first half of 2018. The 2nd half was kinder to Toronto but Vancouver wasn’t so lucky, as the BC government implemented more rules to deter speculation.

However, 3,781 transactions in December of last year spelled a 23% tumble from the same month the year before in Toronto. There was a buyers’ rush in 2017 to beat the new rules, so the numbers are more than likely inflated. A 47% drop in sales to 1,072 in Vancouver, meant the weakest numbers in a decade for the city.

New listings were down 13% for the year in Toronto and 32% in December—which might be a symptom of homeowners staying put and not cashing in on previous gains.

Interestingly, a benchmark price of $764,200, is a 3% increase from December 2017 in Toronto. With benchmark prices skyrocketing at 9% year-to-year, the condo sector performed the strongest but detached homes were largely unaffected at $907,900.

In Vancouver, a $1.03 million benchmark home price in December, meant a 2.7% drop from the year prior.