Toronto’s housing market is on fire, with prices projected to surge higher still.

June marked a record month for housing in Canada’s biggest city as sales climbed 18.4 per cent from a year earlier to 11,992, the Toronto Real Estate Board said today.

The benchmark Multiple Listing Service price climbed 8.9 per cent in the same period, while the average price rose 12.3 per cent to $639,184.

“High-end homes have accounted for a greater share of overall transactions this year compared to last year,” the realtors group said.

“This is the key reason why the average selling price has increased at a greater annual rate than the MLS HPI composite benchmark,” it added, referring to the home price index that is deemed a better gauge of market action.

The average price of a detached home in Toronto’s 416 region, so-named for its telephone area code, surged 14.2 per cent to $1.05-million.

In the surrounding 905 region, the price rose 15 per cent to just over $738,000.

Average prices rose across both regions by 11 per cent for semi-detached properties, 13.1 per cent for townhouses, and 6.3 per cent for condos.

Along with Vancouver, Toronto is the city most deemed to be frothy.

Vancouver is also coming off a record month.

“No doubt, galloping home prices in two of the least affordable cities in Canada have supported demand in these two regions,” said senior economist Sal Guatieri of BMO Nesbitt Burns.

“But the bigger question is whether the ‘side effects’ of the current (and future) low interest-rate environment will send the patient back to the emergency ward if (and more likely when) prices correct lower,” he added in a research note.

“Both cities will get another shot of adrenalin if the [Bank of Canada] cuts rates next week.”

And across the country, home prices are believed to be inflated by between 10 per cent and 30 per cent, according to Bank of Canada models.

Obviously, there’s an affordability issue for detached Toronto homes, particularly for first-time buyers.

New listings in Toronto have “edged upward” this year, but the annual pace of sales “continues to far outstrip listings growth,” said the real estate group’s director of market analysis, Jason Mercer.

New listings rose 6.7 per cent, while active listings slipped 13.1 per cent.

“As long as this situation persists, expect home prices to trend strongly upward,” Mr. Mercer said.