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Homes near Yonge Street and Eglinton Avenue in Toronto on Dec. 9, 2020.Fred Lum/The Globe and Mail

The average home price in the Toronto region will soar to more than $1-million this year, the area’s real estate board says in its annual forecast, as record-low mortgage rates push aside pandemic concerns to fuel another frenzied period of buying.

The Toronto Regional Real Estate Board predicts 105,000 homes will sell this year, a 10-per-cent increase over last year, when buyers benefited from low borrowing costs and raced to buy properties with more room in the city, suburbs and semi-rural areas.

Sustained demand for houses, combined with dwindling supplies of low-rise properties, will keep competition hot. The average selling price is expected to reach $1,025,000 across the Greater Toronto Area and nearby regions. That is a 10-per-cent increase over last year’s average selling price of $932,222.

“Just looking at the momentum we had, and the fact that we expect to see borrowing costs remain low, it makes sense that demand for housing generally will remain strong as we move through this year,” the real estate board’s chief market analyst Jason Mercer said on a call with reporters.

Mr. Mercer said the conditions are similar to prepandemic days when the mismatch between supply and demand spurred heady competition. But he said the market was not as tight as in 2016, when record sales and skyrocketing home prices prompted policy-makers to impose stricter mortgage rules and anti-speculation taxes.

Today, the record-low mortgage rates have made it easier for borrowers to get bigger loans. Since the pandemic began and rolling lockdowns restricted activity and forced people to work from home, buyers have sought properties with more room to accommodate their home offices and with outdoor spaces.

“More buyers are acting quickly,” said Sean Simpson, a vice-president of market-research firm Ipsos, on a call to discuss the outlook. Ipsos surveyed buyer intentions in November and December and found that the level of interest was similar to that of previous years, with the strongest intentions in Toronto and just west of the city in Peel Region.

Mr. Simpson said there was a clear trend into the suburbs and that more people were likely to buy a detached house.

The push toward areas just outside the city is reflected in steep price increases. The average selling price of a detached house in the suburbs was up 36.6 per cent, to $1,308,393, in January over the same month last year. In the city, meanwhile, the average selling price of a detached house was up 16 per cent, to $1,581,400.

Part of the suburban price increase can be attributed to buyers from Toronto. “People are used to Toronto prices,” said Paul Taylor, the president of mortgage lobby group Mortgage Professionals Canada, on the same call.

Condos in downtown Toronto continued to be the only type of property to lose value. Although resales almost doubled, the average selling price was down 8 per cent in January, to $624,886, year over year. Apartment and condo rental vacancies have increased in downtown Toronto but if the economy reopens and immigration picks up, the real estate board expects that trend to reverse.

Overall, the average selling price of homes rose 15.5 per cent, to $967,885 in the twelve months to January. The home price index, which adjusts for expensive purchases, was 11.9-per-cent higher over the same period. Home resales were 50-per-cent higher than the same month last year.

With travel on hold, the real estate board said the highest demand has been domestic.

The province’s COVID-19 cases have been declining over the past few weeks but the more contagious variant from the U.K. is expected to be the dominant strain and cases could start climbing again. Mr. Simpson said that home buying continued to be strong during the fall and winter when cases had started to spike and he said he did not expect that demand to subside if there was a third wave.

The pandemic has disproportionately affected poorer households and low-paid industries like retail, food services and accommodation. Meanwhile, wealthier households and homeowners have gotten a break with the low interest rates and were able to save more when entertainment and travel virtually disappeared.

Mr. Simpson said more people have been able to buy homes sooner rather than waiting because they have extra money in their pockets.

Although banks provided mortgage deferrals for almost 17 per cent of their residential portfolios, most of those deferrals have expired and homeowners have resumed loan payments.

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