Purchases of residential land in the Toronto area were down 51 per cent in the first six months of 2013, according to analysis by RealNet Canada, while sales of new high- and low-rise homes fell 34 per cent.
Residential land sales were down 30 per cent and 52 per cent in Vancouver and Calgary, respectively.
The study — which ties purchases of residential land to sales or new homes including condos, townhouses and detached houses — points to an overall cooling in those three markets says Richard Vilner, RealNet's research manager for GTA commercial real estate.
"This is definitely a major slowdown" that will persist "for some time," Vilner told CBC News.
"It's not going to turn around in the third quarter," Vilner said. "There's not going to be a major correction back to the high-flying land acquisitions of 2011 or the first half of 2012 because there's still a huge amount of inventory to sell off."
A similar point was raised earlier this week by the market research firm Urbanation in its study of the Toronto condo market. Urbanation noted the market is being weighed down by an overabundance of unsold condos.
Vilner predicts the markets in Toronto, Calgary and Vancouver will eventually "self-correct" once prices come down on unsold homes.
But that hasn't happened yet, and he is reluctant to guess when it might.
Townhouses gaining popularity
The high price of land is a major factor. Since 2005, the cost of low-density land and new detached houses has both gone up by 79 per cent.
The price of an average detached new home is close to, or at, what RealNet believes to be its peak at $764,144. Highrise pricing has stabilized at about $577 per square foot.
While the costs of houses and condos remain high there is a glimmer of affordability in the townhouse market, says RealNet, most notably in Toronto.
"The townhouse market has become increasingly attractive to consumers," the company said in a statement though it warns that popularity among buyers and builders could lead to higher prices.