Written by BNN.ca

The relentless surge in Toronto home prices is forcing Canada’s federal government finance minister, Bill Morneau, Province of Ontario counterpart, Charles Sousa, and Toronto Mayor John Tory to meet to discuss how they can cool down the red-hot market.

The same day (Wednesday) the Toronto Real Estate Board reported the average selling price of a detached property in the city of Toronto had surged 33.2% Y-o-Y to $1,561,780, after having soared 27.7% in February compared with the same month a year ago, Morneau sent a letter to Sousa and Tory on Wednesday in which he said:

“I am concerned that dramatic house price increases will have long-term implications for housing affordability and housing market stability.

A combination of low interest rates and rising home prices has encouraged some Canadians to take on high levels of debt to get into the housing market, making them more susceptible to changing economic conditions.”

Morneau is calling on Sousa and Tory to hold the meeting at “the earliest opportunity,” while citing concerns about market stability.

Via Twitter, Tory let it be known that:

I’m looking forward to meeting with @Bill_Morneau and @SousaCharles soon to discuss the Toronto housing market.

going on to say:

“It’s deeply concerning to me because not only are people losing hope of having a home – a rental or an ownership home, but they’re losing even just the mathematical ability to contemplate what they hope for. The dream of home ownership has to be kept alive.”

It is not just politicians who are extremely concerned:

BMO Capital Markets Chief Economist Doug Porter told BNN via email:

“Demand is nearly insatiable. Policymakers simply have to take steps to cool demand, with some haste. … We are now approaching the rarified air Vancouver was in a year ago.

I suspect many folks are being offered prices they never thought they would get in their wildest dreams and are cashing in. Some may be influenced by bubble talk, but I believe most people respond to their own circumstances and the incentives that are staring them in the face.”