Only 3,200 homes are left for sale on Toronto's market after record year

TORONTO, a city of more than 6.5 million people, has just 3,200 homes left for sale to start the year after a real-estate frenzy fuelled by low interest rates drove the market to record levels.

More than 121,000 homes were sold in Canada's biggest city in 2021, up 28 per cent from the previous year and smashing the previous high set in 2016, according to data released on Thursday (Jan 6) by the Toronto Regional Real Estate Board.

Buyers competed for the dwindling number of properties by bidding up prices: the average selling price for the year was nearly C$1.1 million (S$1.17 million) in Toronto, also a record and up 18 per cent from a year earlier. Sales weakened in the second half as supply dried up. A year ago, there were about 7,900 homes for sale. This will add urgency to a growing debate on addressing housing cost, which is spiralling out of reach for many in the largest cities.

Vancouver, long Canada's most expensive real estate market, reported its own record-breaking year on Wednesday. Local authorities in both Toronto and Vancouver have tried to cool off their housing markets by taxing foreign buyers in recent years. Though these measures had some effect initially, the past year's activity has exposed a bigger problem - the mismatch between population growth and the pace of homebuilding, which many see as the root of a national housing shortage.

"Bottom line is we continue to suffer from a real lack of inventory on the marketplace," Jason Mercer, the Toronto real estate board's chief market analyst, said in an interview. "We really need to get a sense of what policymakers are going to do to get a handle on that supply issue."

While Prime Minister Justin Trudeau was returned to power in the 2020 polls on promises to address the cost of housing, the measures most immediately available to the federal government - like new taxes on speculators and help for first-time buyers - are ones that affect demand. Supply is most directly controlled by municipal and provincial governments, which hold sway over rules for land use and development. Reforms to these processes appear to be a ways off in Toronto and Vancouver.

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Meanwhile, both cities saw new listings fall last month. The 3,232 listings still active in Toronto at the end of December, and the 5,236 in greater Vancouver, were the lowest in records going back decades. With so few properties to buy, prices continued climbing during the month. The average price in Toronto topped C$1.2 million for the first time on a seasonally-adjusted basis - the eighth consecutive monthly increase. BLOOMBERG