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Though not directly aimed at the housing market, the Bank of Canada stuck another pin in the sector last month when it raised the overnight lending rate by 0.25 per cent. The move was matched by banks who all increased their prime lending rate from 2.7 per cent to 2.95 per cent.

“I don’t think policy has been tightened too far and I don’t think actions are called for to stop the cool off,” said Craig Alexander, chief economist with the Conference Board of Canada. “These are early days after the recent policy changes. The bulk of the market reaction is purely psychological. In the coming months, listing are likely to fall and the decline in sales will moderate. I suspect that the Bank of Canada will be pleased to see the cooling, and will monitor the risks of a sustained downturn. I don’t think they will hike again at next meeting, but another quarter percentage point increase should occur before the end of the year.”

The slide in Toronto prices does not show any sign of abating. The average price of a detached home in GTA is close to breaking through the psychological $1 million barrier. TREB said the average detached home in the GTA sold for $1,000,336 last month, a 4.9 per cent increase from a year ago and well below the $1,205,262 average in April.

TREB statistics do show more moderately priced segments of the market like semi-detached homes and condominiums are performing better as the GTA market cools. The average condo unit in the GTA sold for $501,750 in July, up 23.2 per cent from a year ago. That price was off from $519,784 in June.