The first chapter of this year’s Toronto-area real estate story reads a lot like the last, with January delivering a 22 per cent year-over-year increase in home prices, according to the Toronto Real Estate Board’s (TREB) benchmark index.

The average selling price of a home in the region was $770,745 last month on the index — $140,552 more than a year ago, TREB reported Friday.

Low-rise housing — detached, semi-detached and town homes — saw the largest year-over-year price growth of 26 to 28 per cent compared to last January. But condo prices also rose 14.5 per cent across the region, to an average $442,598.

Condos also saw the greatest gains in the number of sales, increasing 26.7 per cent across the region, year over year.

Overall, the number of re-sale home transactions of all types rose 11.8 per cent compared to January 2016. There were 5,188 sales last month, compared to 4,640 last January.

But with the exception of condos, the majority of sales were in the 905 communities surrounding Toronto.

Detached home sales dropped 5.5 per cent in the city, compared to an 11.9 per cent increase outside Toronto's borders.

"You can't buy what's not available," said Jason Mercer, TREB’s director of market analysis, who noted that inventory of re-sale homes in the Toronto region is about half of what it was last year.

The shortage is particularly severe in Toronto.

"If you look at the 416 as a whole, 50 per cent of transactions are accounted for by low-rise (detached, semi-detached and townhomes) and so when you're seeing the detached number off on a year-over-year basis, mainly that's just a lack of inventory," he said.

But that supply shortage has also affected the luxury condo market in Toronto, said Royal LePage agent Caily Heaps Estrin, whose practice is concentrated in the core.

She called January a "decent start" to the new year.

"We've seen a little more activity than we did last year, but I wouldn't say it's as dramatic as these stats would have you believe, unless you're working a broader market," she said.

That lack of inventory and Toronto prices are pushing buyers outside the city limits where there are more homes to buy, said Heaps Estrin.

"Our turnover is so low in the central core because people who would typically be moving out of their forever homes and downsizing are finding it hard to get into a size they would like to retire to, whether it's a condo or a smaller house," she said.

Heaps Estrin said she's had clients lately indicate that the municipal land transfer tax, which TREB says costs the average home buyer in the city about $11,000, is increasingly a deterrent to moving house in Toronto.

Toronto city council is looking at harmonizing that tax with the provincial land transfer, which would add $750 a year to all but first-time buyers, who would likely get a bigger rebate to compensate for that difference.

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TREB is urging the government to address the supply side of the housing sector in areas such as land use policy instead of focusing solely on demand by adjusting lending rules.

New-home builders are also pushing the province to go slower on its new population density targets in the Toronto region and municipalities to clear residential development approvals sooner.

TREB is predicting a strong year for Toronto region real estate with gains between 10 and 16 per cent with single-family homes in greatest demand.

But with half of home purchasers expected to be first-time buyers, condos are also expected to continue to perform strongly.

"As you continue to see prices increase, you are going to see people look at other home types within the housing continuum. Some of that focus, especially when you're talking about first-time buyers, is going to be on that condominium apartment segment," said Mercer.

"Prices are lower and it makes sense that's the entry point for these households," he said.

Right At Home Realty agent Ian Serota says he's not convinced that the cooling off that was predicted for 2017 will actually happen, although rising interest rates — something that began late last year — could have an impact.

But the employment picture, a major contributor to the property market's health, continues to look strong.

"Job growth outside of Toronto is minimal and there is no reason for people to move to another city," he said.

Detached houses in Toronto remained the most expensive category, averaging $1.34 million last month. But the cost of a detached house in the 905 was also edging up to about $1 million.

In the Toronto region, Simcoe registered the greatest price gains — 28.46 per cent — followed by Durham Region, where the index registered a 26.43 per cent price increase year over year. Homes in Toronto saw the lowest increase of 16.33 per cent.