Regulations designed to cool off the real estate market took their toll on new home sales in the Greater Toronto Area last year, but things are starting to look up again, according to data released Friday.

There were 566 new single-family dwellings sold in the GTA in July, up 136 per cent from the same month last year, according to new numbers released by the Building Industry and Land Development Association (BILD). The number of new condos sold rose 22 per cent over the same period, with 2,297 units changing hands.

“The market has been artificially depressed because of some of the regulatory measures, but we’re encouraged to see demand still being strong,” said David Wilkes, BILD’s president and CEO.

“I remain very bullish because of the demand. This is an area where people want to live,” Wilkes added.

The price of new single-family homes fell to $1,091,727 in July, a drop of 4.5 per cent over the past year. The price of condos rose to $838,824, an increase of 8.3 per cent.

One of the biggest contributors to last year’s relative slump, Wilkes said, was the mortgage stress test introduced at the beginning of 2018 by the Office of the Superintendent of Financial Institutions (OSFI).

Regulation B20 requires borrowers who pay a down payment of more than 20 per cent to demonstrate that they can afford a mortgage (or home equity line of credit) at two percentage points above the rate being offered, or the Bank of Canada’s 5-year benchmark, whichever is higher.

The move was designed to cool off some of the country’s strongest real estate markets, including Toronto and Vancouver.

Many buyers also hurried to buy homes before B20 came into force, meaning sales which would have otherwise happened in 2019 were shifted to late 2018, Wilkes said.

“There was definitely a rush to close,” Wilkes said.

With a federal election set for October, Wilkes is hopeful B20 will be tweaked. Among the changes called for by BILD and other real estate industry associations is making the 2 per cent a hard cap, which gets reduced as interest rates rise. So if rates go up by a quarter point, the stress test would add 1.75 points.

The head of OFSI, however, has argued against changing B20 at all.

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“The escalating cost of home ownership in Canada, and its knock-on effects to the economy and to society, is a problem — and it’s a problem that is proving very challenging to address,” OSFI’s assistant superintendent Carolyn Rogers said during a speech in February.

“But the answer to this important problem cannot be more debt,” Rogers said. “Particularly, it cannot be more consumer debt, fuelled by lower underwriting standards.”