Canada’s average home price rose 31.6%—or $172,361—over the last 12 months, to yet another record-setting high in March.

The average national price now stands at $716,828, according to data from the Canadian Real Estate Association (CREA). Even without the high-priced markets of the Greater Toronto and Vancouver Areas, the average price still stands at $556,828, up 34.3% from last year.

At the same time, housing inventories continue to tighten, with a remarkable 1.7 months of inventory available—the lowest reading on record. This is the amount of time it would take to liquidate current inventories at today’s rate of sales.

There was a glimmer of hope, however, that the housing supply that’s been locked up since the start of the pandemic may finally be starting to free up in the form of heightened activity. March saw 76,259 home sales, an annual gain of 76.2% and the highest level of activity of any month in history, CREA said.

“The real issue is not strength in housing markets, but imbalance,” said Cliff Stevenson, Chair of CREA. “That demand has been around for months, but with the shortages in supply we have across so much of Canada, a lot of that demand has been pressuring prices. So the big rebound in new supply to start the spring market is the relief valve we need the most to get that demand playing out more on the sales side of things and less on the price side.”

Cross-Country Roundup of Home Prices

Once again, it was the communities within several hours’ drive from Toronto that continued to see the most aggressive price growth, with prices up a whopping 40%+. They included Tillsonburg District (+41.8%), Woodstock-Ingersoll (+45.1%) and the Lakelands cottage country region, comprising Parry Sound, Muskoka, Haliburton and Orillia (+41.8%).

Here’s a look at some more regional and local housing market results for March:

• Ontario: $890,035 (+29.9%)
• Quebec: $435,516 (+27.9%)
• B.C.: $945,936 (+20.2%)
• Alberta: $443,000 (+16.2%)
• Barrie & District: $713,500 (+36%)
• Halifax-Dartmouth: $474,271 (+34.4%)
• Ottawa: $611,900 (+29.1%)
• Greater Montreal Area: $474,000 (+22.4%)
• Winnipeg: $306,800 (+12.1)
• Greater Vancouver Area: $1,123,300 (+9.4%)
• Victoria: $765,300 (+7.3%)
• Calgary: $436,800 (+6.2%)
• Edmonton: $330,200 (+4.4%)
• St. John’s: 265,600 (+3%)

Are More Policy Responses on the Way?

Last week, the Office of the Superintendent of Financial Institutions (OSFI) unveiled proposed changes to its uninsured mortgage stress test, which would raise the current minimum qualifying rate from 4.79% to 5.25%. If it comes into effect on June 1 as proposed, the measure is estimated to reduce the purchasing power of homebuyers by approximately 4%.

But there’s now speculation that the Department of Finance could be next to announce a stricter stress test for insured mortgages (generally those with less than a 20% down payment) during the tabling of the federal budget on April 19.

“Together, these measures would directly dial down the demand heat by a few degrees,” wrote Robert Hogue of RBC Economics.

Hogue added that a supply response “is likely to fall short in the near term,” but that some cooling of demand needs to take place to help moderate price growth. “A gradual rise in longer-term interest rates, deteriorating affordability and the resumption of office work will eventually restrain demand, but it’s difficult to know when that will be,” he said.

But economists at Scotiabank still see further price gains in the months ahead, given that the sales-to-new listing ratio of 80.5% is well above its long-term average, not to mention the additional housing demand expected from increased immigration when border restrictions are lifted.

They add there could be a small rush of buyers during the spring market to qualify for a mortgage before mortgage rates rise further and ahead of OSFI’s stricter stress test.