In 1996, the average home price in the Greater Toronto Area was $198,150.

Today, it is $1,095,475.

A new report from Re/Max Canada found that the skyrocketing price increases over the past 25 years have been driven by strong demand and limited supply.

Since 1996, residential unit sales have doubled and the average price has risen by 453 percent.

Between 1996 and 2021, more than two million homes were sold in the GTA, representing a $1.1 trillion boom for the real estate market.

Christopher Alexander, president of Re/Max Canada, said in a press release: "The GTA housing market has performed remarkably over a 25-year period."

Adding, "This is especially true when considering this time frame marked by the tech crash due to the events of 2000, 9/11, SARS, the Great Recession of 2008, Ontario's fair housing plan, and the ongoing pandemic."

Explaining that, while costs are rising, Alexander said the average annual growth rate is 7.08 percent, which is the "best rate" to maintain as it is not too strong yet remains positive – meaning homeowners gain "a little equity each year."

Alexander also said: "Anything above eight or nine percent would raise concerns about how long it will last."

Adding, "There are many stories about a housing bubble but seven percent is ideal, so if you hope for an estimated number year after year, it would be that."

The report analyzed home purchasing activity in nine GTA areas – East Toronto, West Toronto, Toronto Central, Durham, Halton, Peel region, York region, Simcoe, and Dufferin.

The report found that land availability, especially in the city core and surrounding communities, has diminished, and that lower supply combined with immigration, lower interest rates, and affordability continue to impact the GTA market.

While a few areas saw triple-digit sales increases, including Central Toronto, Halton region, York region, Simcoe county, and Dufferin county, the entire GTA "reached new levels" for average sale prices.

The report explains that the reason for increased sales in Halton, Durham, Peel, and York areas is new construction – it also notes that East Gwillimbury is Canada’s fastest-growing municipality.

The report clarified that over the past 25 years, these areas have offered more affordable options for those looking to buy, as first-time buyers moved to those areas and transportation infrastructure was developed with the GO train and another 400-series highway.

But with less space to build on, higher density housing has become a priority with more residential units being constructed – residential units in Mississauga represent one out of every two sales, according to the report.

Condominiums and detached homes represent 76 percent of sales in downtown Toronto, according to data from the Toronto Regional Real Estate Board (TRREB).

Cameron Forbes, a broker at Re/Max real estate in Toronto, said there is not much land available to increase supply.

Explaining that to increase supply, the GTA needs to be creative and “more flexible with municipal regulations,” he said.

Adding that ways to do this include converting existing lots into two units, converting single-family homes into multi-family residences, demolishing current stock to increase density – the Imperial Oil building on St. Clair Avenue West – now Imperial Plaza Condominiums – is the prime example.

Forbes said that with population growth expected in the GTA, high demand will continue.

Explaining that at the start of the pandemic, immigration numbers fell with border closures, but the federal government is compensating for the shortfall allowing more than 400,000 new permanent residents in 2021 – the largest number of newcomers in a single year in Canadian history.

It is expected that in 2022 there will be 420,000 new immigrants, and 430,000 in 2023.

Forbes said about 40 percent will settle in the GTA, resulting in nearly 160,000 to 170,000 newcomers.

This means between 50,000 to 60,000 new homes will need to be built annually to accommodate them. He noted that 40,000 new homes were built annually over the past decade.

Forbes added, “This is a big reason for rising prices.” But he said there are still pockets of affordability, as those looking to enter the market can buy smaller condos in the city or move farther out in the GTA, or just outside, if they are looking for a family home.

Forbes said that due to the pandemic, more people moved out of downtown thanks to remote work.

Housing prices are expected to rise over the next 25 years at a rate higher than inflation due to population growth and the job market, as many flow into the GTA in search of job prospects.

But Forbes said: “The economy is strong in the GTA.”