Canadian housing starts in March hit their highest level since September 2007, driven by a significant increase in the Toronto market and its surrounding communities due to shortages in resale listings and rental units, fresh figures show.

Housing starts increased 18.4% to a seasonally-adjusted rate of 253,720 units in March, according to Canada Mortgage and Housing Corp., marking the third consecutive month-over-month increase.

“The housing boom continues courtesy of low interest rates from the Bank of Canada,” said Marc Pinsonneault at National Bank of Canada in a brief to clients following the release.

With fears mounting that the Canadian property sector is at risk of overheating, owed in part to the availability of easy money, the Bank of Canada may have to consider raising interest rates in the future.

“Clearly, the Canadian housing start level in March, the highest over a decade, is not sustainable,” Pinsonneault added. “The recent surge in house prices in Toronto and in most of Ontario urban areas should induce home builders to continue to start new dwellings at a high rate.”

Many analysts are now focussed on the Bank of Canada’s next move for guidance on whether or not policymakers believe an interest rate rise is needed to cool the housing market.