Mayor John Tory says that there is a need for regulatory action to ensure that the “dream of home ownership” is “kept alive” amid a frenetic escalation in real estate prices and continuing erosion in affordability.

Tory made the comment to reporters on Wednesday morning following the release of new data from the Toronto Real Estate Board which showed that the average price of a GTA home jumped 33.2 per cent in March from a year previous.

The data places the average cost of a GTA home at $916,567. In Toronto, the average cost of a detached home surpassed $1.56 million and the average cost of a semi-detached home hit $1.09 million.

The pace of price growth in March was the highest since 1989, which is now recognized as the beginning of a sustained housing correction in Toronto.

“The situation is deeply concerning. It is deeply concerning because people are not only losing hope of having a home but they are losing the mathematical possibility of even contemplating it,” Tory said. “The dream of home ownership has to be kept alive and it has to be kept alive not just for people of means but for people who are seeking housing that is more modest.”

BMO Capital Markets Chief Economist Doug Porter told BNN on Wednesday that the demand for housing is “nearly insatiable” and that “policymakers simply have to take steps to cool demand, with some haste.”

Tory, however, told reporters that he continues to see the lack of supply as the primary reason for soaring house prices rather than demand.

He said that policymakers have an “obligation to look at every possible means to increase supply” and to ensure that “speculation is not overtaking the market.”

“Housing is for people to live in. It is fine for people to invest in but it is for people to live in,” he said. “We need to make sure that people are not taking undue advantage of the opportunity to invest in housing.”

City still studying vacant home tax

Tory has previously mused about instituting a tax on vacant homes as a way to get some of the estimated 65,000 vacant properties in Toronto back onto the market.

On Tuesday, he said that staff continue to study that possibility though he conceded that the province would have to grant permission for such a tax to be implemented by the municipality.

He said that he would also like to see a review of the rules governing the real estate industry, which he said that some experts view as “quite weak.”

“I see for example people are being encouraged to wave all conditions and to not do things that I think are prudent, including getting a home inspection. I think the whole area should be reviewed,” he said. “We need to make sure that people are being protected at a time when they have enough problems in trying to buy a home.”

Lack of listings continues to drive price acceleration

Toronto has seen sustained double-digit increases among all home types but advocates for the real estate industry have rejected calls for measures aimed at curbing demand, such as a foreign buyers tax, and have contended that a lack of available homes is the sole factor driving price increases.

“We are still seeing people taking advantage of low borrowing costs and they are confident because overall the GTA economy has performed quite well but the issue is that a lot of these would-be homebuyers haven’t been able to find a home to buy because there has been a real constrained supply in listings, flat-lined to down has been the trend,” TREB's Director of Market Analysis Jason Mercer told CP24 on Wednesday. “As a result we are seeing more competition among buyers and an upward pressure on home prices.”

Finance Ministers Charles Sousa has previously said that he will include measures to cool Ontario’s overheated housing market in the upcoming budget, though it remains unclear what those measures may be.

Speaking with reporters at Queen’s Park on Wednesday, Sousa said that the province has “got to find a way to help” address the rising prices in the marketplace but he warned that there is “no silver bullet.”

The province has previously doubled the rebate on its land transfer tax for first-time homebuyers in order to help more people get into the market. Sousa has also pushed Federal Finance Minister Bill Morneau to make changes to the capital gains tax on the sale of homes not classified as a primary residence; however Morneau has not acted on that request.

"To what extent any one measure will have a positive impact or negative impact is questionable and we're still trying to ensure we put nobody in harm's way,” Sousa said on Wednesday.

While Sousa has promised measures to address rising housing prices, TREB has warned against “knee-jerk” policies that could send the market into a tailspin, such as a tax on foreign buyers. 

In a news release issued Wednesday, TREB said that "policymakers must remember that it is the interplay between the demand for and supply of listings that influences price growth."

Ontario Housing Minister Chris Ballardsaid that when it comes to measures aimed at cooling the market the government must therefor proceed with caution.

“For many Ontarians, their house is the biggest asset that they have, they're looking at their house as something that will get them through their retirement years," he said on Wednesday. "So, we have to be cautious - at the same time recognizing that for so many Ontarians, they feel shut out of the housing market."

Tory previously said that his administration has been “actively involved” in discussions with the province ahead of the budget and is waiting to see what measures will be taken to cool the market.

He added that the recent escalation in housing prices has created a “desperate situation” for prospective homebuyers, one that needs to be rectified.

With files from The Canadian Press