A tight Greater Toronto Area (GTA) housing market kept home prices elevated in March, with the average selling price of a property clocking in at $1,299,894.

However, there were signs the flurry of activity in the red-hot market were starting to ease.

The latest data from the Toronto Regional Real Estate Board (TRREB) showed there were 10,955 home sales in March. While that’s a roughly 17 per cent increase on a monthly basis, home sales in the region fell almost 30 per cent compared to the same month last year. All housing segments saw sales activity fall, led by low-rise properties.

New listings dropped 11.9 per cent year-over-year – less than the decline seen in sales.

Still, the continuation of tight market conditions kept the average selling price hovering at nearly $1.3 million, down only modestly from the record set in February, and an 18.5 per cent rise from March last year.

“What is this? Some growth stock?” Ryan Lewenza, senior vice president and portfolio manager with Turner Investments at Raymond James, said of the jump in home prices during an interview on Tuesday.

“This is supposed to be a house that's supposed to go up with inflation.”

Lewenza said while fundamentals, such as a strong economy and labour market, are helping drive housing activity, ultra-low interest rates have more so underpinned the market. He added that as rates rise, it will work against homebuyers.

“It's my strong belief that the incredibly low interest rates that we have seen have been a boon to housing. So if you play it forward, rising interest rates is going to take the bloom off this rose and so I think prices are going to be peaking soon and come off,” he said.

However, Lewenza made it clear he’s not expecting a major pullback.

“I don't think that they rise at a slower rate. I think that they peak and come off,” he said. “I could see prices down five to 10 per cent over the next 12 to 24 months. I don't see a crash. You know we have very progressive immigration policies with 350,000 new immigrants a year […] so I don't see prices collapsing. But, yes, I think prices are going to come off and that would be good.”

As home prices remain out of reach for many, it’s widely expected that the federal government will unveil measures aimed at improving housing affordability in its budget this week.

TRREB President Kevin Crigger said he wants to see measures aimed at increasing the housing stock.

“Now is the time for governments to govern and focus on measures that are proven to increase housing supply. The GTA population will experience rapid growth in the coming years as our region’s economic strength and diversity continues to attract people from around the world. In order to sustain this growth, we need adequate housing supply and choice,” he said in a release Tuesday.

“This needs to be the focus of policymakers rather than short-term and ineffective measures to artificially suppress demand.”