03/05/2013 10:29 EST | Updated 05/05/2013 05:12 EDT

Toronto home prices tick higher despite 15% sales drop

The average price of a home in Canada's largest real estate market increased two per cent to $510,580 in February.

In a release, the Toronto Real Estate Board attributed the numbers to a weak showing in the luxury detached homes, where there were fewer homes sold, and cheaper prices for those that did.

When the federal government cracked down on the mortgage market last summer, the most high profile change was to limit the length of a CMHC-insured mortgage to 25 years. But Ottawa took particular aim at luxury homes, by mandating that anyone wishing to buy a home worth more than $1 million must have at least 20 per cent or $200,000 minimum as a down payment.

"Stricter mortgage lending guidelines that precluded government backed mortgages on homes sold for over one million dollars and the City of Toronto’s additional upfront land transfer tax arguably played a role in the slower pace of luxury detached home sales," TREB president Ann Hannah said.

All in all, there were 5,759 Toronto homes sold in February. That's 15 per cent less than last year, but the board noted that 2012 was a leap year, so the baseline to compare against is larger. When a 28-day year-over-year sales comparison is used, the decline was only 10.5 per cent, TREB noted.

The board says it expects some volatility in home prices through the year, but it expects average prices to increase by about three per cent all year. Across all segments, TREB is expecting an average price of $515,000 through 2013.