Home Prices in "Drum-Tight" Toronto Surge by Most on Record

Toronto’s home prices capped a record quarter of gains in March amid concern the market is in a bubble.

Prices in the nation’s biggest city increased 6.2 percent last month from February, according to a benchmark price index released Tuesday by the Canadian Real Estate Association. The gain is the biggest in records dating from 2000. Actual price gains averaged almost 5 percent in the quarter, the largest three-month increase in records dating from 1988.

“The drum-tight housing market balance in Toronto and nearby cities stands in contrast to housing market trends elsewhere in Ontario and other provinces,” CREA chief economist Gregory Klump said in the report.

The figures come hours before officials including Canadian Finance Minister Bill Morneau, Ontario Finance Minister Charles Sousa and Toronto Mayor John Tory meet to discuss surging sales and prices that some economists describe as a bubble.

Toronto is the last major Canadian city with such characteristics; demand in Vancouver slowed after new taxes on foreign buyers and federal measures on mortgage lending were introduced last year. The Globe and Mail newspaper, citing a senior government official, reported Tuesday Ontario is looking “intently” at a new tax on non-resident speculators.

Toronto home prices increased 29 percent from a year earlier. Nationally, prices rose 4 percent on the month and 19 percent on the year.

Sales rose 0.4 percent on the month in March and by 17 percent from a year ago. Nationwide, they climbed 1.1 percent on the month and 6.6 percent on the year.