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Toronto’s Home Sales and Prices Soared Double Digits in October

Homebuyers faced intense competition amid an extreme shortage of listings

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A home at 24 Hedgerow Court in Kleinburg, Ontario, is on the market for C$7.8 million. The latest market report shows that home sales and prices in Greater Toronto Area soared double digits in October.

Sotheby's International Realty Canada
A home at 24 Hedgerow Court in Kleinburg, Ontario, is on the market for C$7.8 million. The latest market report shows that home sales and prices in Greater Toronto Area soared double digits in October.
Sotheby's International Realty Canada

The residential real estate market in the Greater Toronto Area  broke records in October, despite the government introducing stricter rules for mortgage lenders and foreign buyers in the same month, according to a new market report.

There were 9,768 home sales in the  Greater Toronto Area in October, a record high, representing  an 11.5% increase from the same month last year. Meanwhile, the average selling price for all types of homes rose by 21.1% to C$762,975 (about US$569,767), according to the latest Market Watch report released by the Toronto Real Estate Board on Thursday.

The board’s MLS Home Price Index Composite Benchmark was up by 19.7% from a year ago.  

"The main reason for the double-digit growth is that the economy and employment in Toronto are very robust, and Toronto is a primary residential city where most homes are occupied by owners," said Jason Mercer, the Toronto Real Estate Board’s director of market analysis.

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But there is not enough inventory to offset the strong demand. New listings were slightly up 0.9%, in October compared to last year, according to Mr. Mercer.

Paul Maranger, an agent with Sotheby’s International Realty Canada in Toronto, had similar observations. "The market is driven by extreme shortage of listings. The supply in Toronto this year hit the lowest level in 19 years," said Mr. Maranger.

The luxury segment in Toronto, where C$2 million-C$2.5 million is considered the entry level, takes up a very small percentage in the overall market. Of all home types, there are 325 sales in October that are priced C$2 million and above, about 2.5% of the total sales.

This submarket is less likely to be hit by the government’s cooling measures, according to Mr. Mercer. "Until we experience sustained relief in the supply of listings, the potential for strong annual rates of price growth will persist, especially in the low-rise market segments," he said.

Early in October, Canadian Minister of Finance Bill Morneau announced new rules aimed at limiting foreign money into Canadian real estate and ensuring that borrowers only take on mortgages they can afford.

Write to Fang Block at fang.block@dowjones.com