Just when it seemed like Toronto housing prices couldn't get any higher, a new report indicates they will reach even more unaffordable heights this year.

Last year, Toronto home prices skyrocketed. The average price of a home in the GTA was $1,095,475 in 2020, an increase of a whopping 17.8 per cent from 2020, according to a new market outlook report from the Toronto Regional Real Estate Board (TRREB), 2022 Market Outlook and 2021 Year in Review.

TRREB is expecting another record year for 2022, predicting the average selling price for all home types combined will soar to $1,225,000, an approximate increase of 12 per cent when compared to last year.

The board expects 110,000 home sales, a dip from 2021 but still strong compared to previous years.

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However, there are a few things that could impact the predictions.

Home buyers will need to be confident in their employment in the long term before making a home purchase. The ongoing concerns around Omicron could also play a role.

With lockdown restrictions loosening, immigration may increase.

"Immigration into Canada and the GTA is expected to be at or near record levels in 2022. All of these people will require a place to live," said TRREB President Kevin Crigger.

Inflation and borrowing costs are a huge concern, and higher mortgage rates will result in fewer home sales. But home buyers have recently been held to a much higher qualification standard under the mortgage stress tests and this could mitigate the impact of higher contract mortgage rates moving forward.

The lack of housing supply continues to be an issue in Toronto as well, the report states.

"Unfortunately, the supply of listings will remain constrained, sustaining strong competition between buyers and double-digit growth in selling prices," said Crigger.

Overall, there are several factors impacting this year's predictions.

"While home sales will remain strong historically, there are a few key factors that will see transactions slightly off last year's record pace. First, higher borrowing costs in 2022 will see some households on the margin of affordability temporarily put their purchase on hold," said TRREB Chief Market Analyst Jason Mercer.

Second, after above-average per capita home sales in 2021, there will be some give-back in 2022, simply because the pool of ready buyers will be smaller. Finally, the perpetual lack of inventory in the GTA will preclude some willing buyers from getting a deal done – simply put: you can't buy what's not available for sale."