TORONTO: Limited supply drove housing prices higher in the Greater Toronto Area last month, with detached homes in the city breaking through the $1.5 million mark for the first time, according to the Toronto Real Estate Board.

The average price of homes sold in the GTA last month soared 27.7 per cent compared with a year ago, while the number of properties sold rose 5.7 per cent, TREB said Friday.

The increase in sales came in spite of the fact that last year was a leap year and benefited from an extra day of activity.

“The listing supply crunch we are experiencing in the GTA has undoubtedly led to the double-digit home price increases we are now experiencing on a sustained basis, both in the low-rise and high-rise market segments,” Jason Mercer, TREB’s director of market analysis, said in a statement.

“Until we see a marked increase in the number of homes available for sale, expect very strong annual rates of price growth to continue.”

Shawn Zigelstein, a sales representative with Royal LePage Your Community Realty, said he expects the trend to continue in the months ahead.

“It’s been crazy out there,” said Zigelstein. “There doesn’t seem to be a slowdown.”

He attributes the price growth to a combination of limited inventory, strong immigration into the city and low interest rates, making borrowing money attractive.

“If we get an influx of inventory, I think we’ll start to see a little bit of a slowdown in pricing, potentially,” he said.

The average selling price in the GTA hit $875,983 in February, while in the City of Toronto it was $859,186, an increase of 19.2 per cent.

The average price of a detached home in the City of Toronto hit $1,573,622, an increase of 29.8 per cent compared to a year ago.

The MLS home price composite benchmark price for all communities measured by TREB was $727,300, up 23.8 per cent.

Concerns have mounted that home prices in Canada’s largest city have spiralled to the point where policy-makers need to intervene, as they have in Vancouver, where a number of measures have been implemented including a tax on foreign buyers. The Ontario government has resisted such a move.

TREB president Larry Cerqua said governments at all three levels need to address the lack of homes available, not foreigners buying properties as investments.

“They should consider revisiting land-use designations in built-up areas to allow for a greater diversity of home types, streamlining development approvals and permitting processes, and looking at ways to incentivize landowners to develop their land,” Cerqua said in TREB’s statement.

Toronto Mayor John Tory said he’s “very concerned” about soaring home prices and that the best thing the city can do is keep a close eye on it.

“We are part of a working group with the federal government and the provincial government to monitor this very closely … to try to make sure we understand what the root causes are of prices increasing,” Tory said.

On Thursday, the Real Estate Board of Greater Vancouver released figures showing a 41.9 per cent plunge in homes sold last month year-over-year.

The MLS home price composite benchmark price for Metro Vancouver was $906,700, 14 per cent higher than what it was a year ago, but down 2.8 per cent from six months ago, after the tax on foreign buyers took effect.

By Alexandra Posadzki, THE CANADIAN PRESS