Canadian house prices jumped more than 25 per cent in November from a year earlier, a record gain propelled by a historic supply shortage.

An increase in properties for sale from October to November wasn’t nearly enough to satisfy demand, according to data Wednesday from the Canadian Real Estate Association. The benchmark sale price climbed to $790,600 (US$612,720).

“The supply issues we faced going into 2020, which became much worse heading into 2021, are even tighter as we move into 2022,” Shaun Cathcart, the real estate board’s chief economist, said in a news release accompanying the data. “As such, the issue of inequality in the housing space will remain top of mind.”

Ultra-low mortgage rates and demand for larger living spaces during the COVID-19 pandemic combined to make Canada one of the hottest housing markets in the world over the last two years. Now, with the central bank indicating that interest rates could rise next year and with a record flow of immigrants entering the country, buyers seem to have found new incentives to get into the market.

Home sales volume in Canada rose 0.6 per cent in November from the month before, while newly listed properties rose 3.3 per cent, the data show. Even with the increase in listings, Canada had just 1.8 months of housing inventory nationally in November, tied with March of this year for the lowest on record.  

Construction began on more than 300,000 new homes during the month, one of the strongest on record and a sign that developers are starting to respond to the housing shortage.

Prime Minister Justin Trudeau promised more homebuilding on his path to re-election in September. But much of the decision-making that drives development rests with local and provincial governments that have authority over zoning. 

In forecasts released with the November sales data, the real estate association predicted that prices would continue to rise in 2022.