(Bloomberg) -- Toronto home sales surged in the lead-up to the Bank of Canada's interest-rate hike this week, with the prospect of higher borrowing costs seeming to spur more buyers to try to get in the market while they can.
Canada's largest city saw about 10,500 properties change hands in February, the most in almost a year, and a 5.9% gain from last month, according to data released Thursday by the Toronto Regional Real Estate Board. The seasonally adjusted average sale price rose 1.3% to C$1.3 million ($1 million).
“We have seen a slight balancing in the market,” Jason Mercer, the real estate board's chief market analyst, said in a statement. “However, because inventory remains exceptionally low, it will take some time for the pace of price growth to slow. Look for a more-moderate pace of price growth in the second half of 2022 as higher borrowing costs result in some households putting their home purchase on hold.”
Canada's central bank raised its benchmark interest rate for the first time since 2018 on Wednesday, and said more hikes were coming with inflation putting the economy in danger of overheating. Housing prices have been driven to record highs by a buying frenzy over the past two years.
Read more: Bank of Canada Raises Policy Rate to 0.5%, Sees More Hikes Ahead
The number of new properties hitting the market in February fell 6.6% from a year earlier, an improvement over January's decline of close to 16%. The total number of active listings at the end of last month was down 20% from the same month last year, compared with the 44% annual decline in January.
The Liberal government of Prime Minister Justin Trudeau and the Conservatives running province of Ontario have said a shortage of housing stock has driven an affordability crisis, and they've advocate policies to get more homes built.
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