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Canadian home sales and prices hit another record in March, with prices spiralling up in most of Ontario as calls intensified for measures to slow the country’s unruly market.

There were 76,259 home resales last month, according to the Canadian Real Estate Association, surpassing the previous record set last July when much of the country emerged from initial pandemic lockdowns and pent-up demand fuelled a surge in sales.

“All policy makers should be actively considering measures that they could take to calm demand, with the focus on steps that don’t have spillover effects into other areas,” said Bank of Montreal chief economist Douglas Porter.

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For most of the health crisis, house prices have soared, with low borrowing costs and the pandemic’s stay-at-home requirements driving competition for bigger properties. The home price index, which adjusts for pricing volatility, was up 3 per cent from February to March on a seasonally adjusted basis to a record $713,700. That was 20 per cent higher than March of last year. (The average selling price, where expensive transactions will skew the price higher, is up 31 per cent year-over-year to $716,828.)

“The pace of Canadian home sales and prices is simply in uncharted territory,” Mr. Porter said in a note. “Given the extreme market imbalance currently at play, almost entirely due to fiery demand, look for the record pace of price gains to spread far and wide beyond Ontario.”

Across the country, properties in smaller cities, semi-rural areas and suburbs have received multiple offers, bids well over the asking price and unconditional offers. The 3-per-cent price index gain in March was down slightly from a 3.3-per-cent jump in February. But those monthly price increases are still the steepest on record and have outpaced the housing boom of 2017, according to CREA data.

There were a record number of new listings, though that did little to satisfy demand. The inventory of houses for sale remained at record lows with the extreme shortages across most of Ontario. More than 40 regions in the most populated province had less than one month of inventory as of the end of March. That includes Barrie, Cambridge, Guelph, Ottawa, Woodstock, Ingersoll and the Toronto region, the country’s biggest market.

Economists renewed calls for some kind of action to cool the market. Royal Bank of Canada senior economist Robert Hogue said demand was far outstripping supply and warrants some policy response. Mr. Hogue has previously urged policy makers to put everything on the table, including taxing capital gains on the sale of principal residences.

Beata Caranci, chief economist with Toronto-Dominion Bank, said timely data on house flippers and investors are needed to tailor policies to discourage speculation.

Bank of Nova Scotia chief economist Jean-François Perrault said he has long favoured measures to reduce excessive speculation in housing markets.

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BMO’s Mr. Porter compared sales and prices to the prepandemic days of March, 2019, and said the two-year jump “absolutely shatters the prior record gain, seen back in the bubble days of the late 1980s.”

The housing shortage has led to fierce competition and big price increases. In Bancroft, a semi-rural area in Ontario, the home price index rose 9.4 per cent from February to March. In the smaller market of Woodstock and Ingersoll, the index was up 8 per cent month-over-month.

Other areas with month-over-month price index increases of more than 5 per cent include Niagara, Huron Perth and Southern Georgian Bay. Ottawa’s home price index also rose more than 5 per cent. The only area outside of Ontario to see a massive price increase was the Chilliwack district in British Columbia, which rose 6.4 per cent month-over-month to $647,300.

“I have never seen the balance tip so much in favour of sellers,” said Robin Wiebe, senior economist with The Conference Board of Canada, who has studied the country’s housing market for more than two decades.

Over the past three months, the selling price for a typical detached house has increased by at least $100,000 in major urban centres of Toronto and Vancouver, as well as the nearby suburbs of Oakville, Milton, Mississauga, Hamilton, Burlington and the Fraser Valley in B.C. Smaller regions such as Cambridge, Guelph and Woodstock have also seen price increases in that order of magnitude.

Although Canada’s bank regulator plans to make it harder for borrowers to qualify for a mortgage, economists do not expect this to have a big impact on prices, nor break market psychology that home prices will continue to rise.

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It is unknown if the federal government will introduce additional measures when it unveils its budget on Monday. Earlier in April, BMO had issued a report analyzing the benefits and unintended consequences of 10 policies that could slow the market, including higher interest rates and various taxes.

The report suggested that a more transparent bidding process would be the most effective policy. For the most part, the bidding process is blind in Canada, which means buyers will often spend tens of thousands more than the second-highest bidder. TD’s Ms. Caranci agreed that more transparency is needed.

“A review of local market practices should occur to ensure that a seller’s market doesn’t turn into a runaway market due to practices that can jawbone buyers, like price-baiting or gaming the lack of transparency on the bid process,” she said in a note.

Mr. Porter said imposing the foreign buyers’ tax outside of the Toronto region and to the rest of the province could have some impact.

“Some of the hottest price gains in the country are in smaller Ontario cities,” he said. “It may not have a big impact, but there’s little cost to at least trying that.” Two bank chief executive officers, at RBC and TD, have voiced opposition to removing the capital gains tax exemption on primary residences.

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