The Toronto Real Estate Board says home sales transactions in the Greater Toronto Area (GTA) plunged last month by 20.3%, compared to May 2016, as prices continued to climb.

The board says the average selling price for all properties in May was $863,910, an increase of 14.9% from the same month last year.

Sales of detached homes, which had an average selling price of $1,141,041, fell by 26.3% in the GTA.

Referring to the drop in sales, Benjamin Tal, deputy chief economist at CIBC World Markets, says, “That trajectory is exactly what the region needs. A market that is falling due to the force of its own gravity as opposed to an external shock.”

The data captures a month during which the Ontario government implemented a 15% tax on foreign buyers in the Greater Golden Horseshoe, a fast-growing region stretching from the Niagara Region to Peterborough, Ont., retroactive to April 21.

Read: It’s here: 15% tax on GTA’s foreign buyers

The measures are intended to temper rapid price growth that has given rise to concerns that Toronto has become increasingly unaffordable.

Read: Is housing exposure a risk for portfolios?

They are also aimed at preventing or mitigating the damage that could result from a housing correction if one were to occur.

The board said in a statement Monday that the effects of Ontario’s housing changes have yet to be seen.

However, Bank of Montreal’s morning note to clients says there’s “little doubt” the government measures have had an impact.

The bank — which includes mortgage lending in its business — says “foreign buyers have likely pulled back, while domestic buyers appear to have stepped back as well to see how the changes shake out.”

Policy-makers at various levels are watching the city’s housing market closely as there are fears that the fallout from a possible crash in prices could have ramifications on the national economy.

Read: Don’t introduce new housing measures: Canadian Bankers Association

There are signs that Canada’s other real estate market of concern — Vancouver — may be heating up again after that city’s real estate board reported Friday that home sales last month have rebounded to near record levels.

Transactions in Metro Vancouver in May were down 8.5% year-over-year, while the MLS benchmark price for all properties hit $967,500, an increase of 8.8% since May 2016.

Like Ontario, British Columbia introduced several measures including a tax on foreign buyers in the Vancouver area last August in an effort to stabilize the housing market.

Though he sees the current trajectory of home sales in the GTA as a positive, Tal says, “Given the lack of external shock as a trigger, we believe that this adjustment will be relatively short-lived, not unlike the situation in Vancouver where activity is already rebounding.”

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