Toronto house prices, sales surge in March, fuel fears of real-estate bubble

OTTAWA (Reuters) – Toronto home sales and prices surged in March, the Toronto Real Estate Board said on Wednesday, fueling fears of a bubble in Canada’s largest city.

The industry group said the average home price rose 33.2% in March to C$916,567 ($684,823) from a year earlier, while sales increased 17.7% and new listings climbed.

The federal government has repeatedly tightened mortgage lending rules to cool the nation’s housing markets, but Toronto remains red hot. Even mainstream Canadian economists have said a bubble is developing there.

Developers and other market observers expect the next attempt to cool the market will come from the Province of Ontario, or perhaps the ®y of Toronto itself, probably in the form of a foreign-buyers tax like the one Vancouver imposed in August.

The TREB report showed the average price of Toronto homes was surging across all categories, including condominiums and the more expensive detached-home market.

While a long building boom in the condo sector had sparked fears of a glut, previous signs of cooling in that market have receded.

Condo prices were up 33.1% in March from a year earlier to an average C$518,879, while the average price of a detached home rose 33.4% to C$1.21 million, the report said.

“Annual rates of price growth continued to accelerate in March as growth in sales outstripped growth in listings,” said Jason Mercer, the director of market analysis at the industry group. “A substantial period of months in which listings growth is greater than sales growth will be required to bring the GTA housing market back into balance.”

New listings rose 15.2% in March from a year earlier.