Buyers racing to beat Toronto’s incoming land transfer tax created an unusual rise in home sales over the holiday season, but a slowdown is around-the-corner after the tax comes into effect.

As of Feb. 1, Toronto home buyers will pay a new fee to the city in addition to the existing provincial land transfer tax. It will nearly double the tax bill for home buyers, raising the tab on a $375,000 home to $7,575 from $4,100. Housing unit sales were up approximately 21 per cent in the GTA in the fourth quarter, compared with 7 per cent in surrounding areas, according to data from the Toronto Real Estate Board.

The strong fourth quarter helped the Toronto market shatter previous sales records in 2007, according to data released by Royal LePage. The average price of a two-storey detached home in the city hit $506,900, up 8 per cent from last year. The price of a detached bungalow rose 8.9 per cent to $413,375, and that of a condo unit rose 10.4 per cent to $280,505.

Two years ago a two-storey home in the city averaged $461,282, while a bungalow went for $362,611 and a condo unit $242,202. After the current wave of buyers subsides, both price gains and sales should start to decline. Let’s just hope the decline is not too steep.