Canada set out to cool a hot housing market, and did it ever.

Luxury-property sales in the nation’s priciest markets fell sharply in the first half of the year amid a slew of government regulations, according to a report released Tuesday by Sotheby’s International Realty Canada. Sales of homes above $1 million fell 46 per cent in Toronto and 19 per cent in Vancouver from a year earlier, while the number of homes sold above $4 million dropped 51 per cent in Toronto and 47 per cent in Vancouver.

The declines follow a wave of lending constraints and taxes implemented by both the federal and provincial governments to tame soaring prices fueled by speculative purchases.

“The collision of rising mortgage rates, stricter lending guidelines and cascading governmental policies and taxes” have hurt a number of important Canadian markets, Brad Henderson, president and CEO of the Sotheby’s unit, said in a statement.

In the condominium subcategory, Vancouver bucked the trend, as homebuyers who were priced out of detached houses turned toward the high-rise alternative. Sales of condos above C$1 million rose 9 per cent in the first six months of the year from the same period in 2017, and 35 per cent for condos above $4 million. In a city where the benchmark selling price for a detached house was $1,598,200 in June, a $1 million condo still looks pretty good, with growing demand from young families and professionals.

“There’s a belief that condos, in particular new condos, are going to continue to be a good investment notwithstanding some of the interim policy measures, and that the market will be able to absorb it and to move on,” Henderson said in a phone interview.

In Toronto, on the other hand, sales of condos above $1 million dropped 13 per cent to 658 units. Sales of condos over $4 million slumped even more, down 40 per cent.

Henderson sees a rebound in the Toronto luxury market in the second half of the year, when the comparison won’t be as tough as it was to the hot first half of 2017. The rebound may take slightly longer in Vancouver, as the market continues to adjust to new policy changes by the provincial government, he said.

Montreal was the only major Canadian city in Sotheby’s report to see overall growth in luxury sales from last year’s first half, with homes above $1 million jumping 24 per cent to 460 sales. The bustling market was protected from the sort of provincial and municipal policies used in Toronto and Vancouver to control prices, Sotheby’s said. Henderson predicts it will level off in the third quarter.

Two wild cards that could tamp down a rebound in Toronto and Vancouver: escalating trade tensions with the U.S. and interest rate increases by the Bank of Canada.