The warning calls about Toronto’s housing market are growing louder on Bay Street after another month of double-digit price gains.

“[Toronto] is not a market operating normally,” BMO Capital Markets Chief Economist Doug Porter told BNN via email Friday in response to fresh data from the Toronto Real Estate Board showing the average selling price across the Greater Toronto Area soared 27.7 per cent year-over-year in February to $875,983.

“My biggest concern here is that speculation will now take full command and the market will absolutely run out of control, eventually ‎leading to a serious correction,” Porter added. “Better for policymakers to take steps to cool things now, before conditions completely get out of hand.”

The price gains in Toronto have continued relentlessly despite new mortgage lending rules announced by the federal government last fall.

“I think what’s important for us is to be measured as we look at the market,” Finance Minister Bill Morneau told reporters in Toronto on Friday. “[We will] consider the actions we have taken and how they are impacting the market – of course those actions take some time – and to consider the actions that will come forward in terms of risk sharing and how they will impact the market”

Toronto’s housing supply crunch was on full display again in February. New listings of properties available for sale across the GTA plunged 12.5 per cent year-over-year and the total inventory of active listings plummeted 50.5 per cent.

Sales, meanwhile, rose 5.7 per cent year-over-year to 8,014. The headline sales growth masks underlying weakness for semi-detached properties (with sales dropping 9.5 per cent from the previous year), and booming activity in the condo market (where sales soared 15.9 per cent year-over-year and prices galloped ahead 19.2 per cent).

"The listing supply crunch we are experiencing in the GTA has undoubtedly led to the double-digit home prices we are now experiencing on a sustained basis," said TREB Director of Market Analysis, Jason Mercer, in a statement. "Until we see a marked increase in the number of homes available for sale, expect very strong annual rates of price growth to continue."

"Over the past year, we have reached a point where government policies that target only the demand side of the market, whether we're talking about foreign buyers or further changes to mortgage lending guidelines, will not be enough to balance market conditions and moderate the pace of price growth," added Mercer.

Fears about overheating intensified last month after BMO’s Porter declared the city and the surrounding areas are in bubble territory. One of his Bay Street peers is stopping just short of saying the same.

“Conditions are ‘bubble-like’ no doubt,” wrote TD Deputy Chief Economist Derek Burleton in an email to BNN.  “Twenty-plus per cent price growth cannot be justified by any set of fundamentals, regardless of how many positives (immigration, decent job growth, low rates) may be driving GTA activity in recent years. But I prefer to characterize the situation in Toronto as ‘undesirably frothy.’  

Meanwhile, Toronto Mayor John Tory has said he's not going to panic.

“It’s a concern. We are watching it carefully,” he told BNN in an interview Friday. “We are working very hard to convince the other governments – federal and provincial – that we have to address the supply of housing.”