So much for rational discourse on an issue.  A lack of listings means that, yes, there is too little supply.  However, there is nothing forcing people to move, forcing them to sell their home.  And there is significant demand; recent census data says that 116,000 more people live in the City of Toronto than 5 years ago.  Using 2.8 people per household (2011 Census), that means the City of Toronto needed about 41,000 new housing units over that 5 year span.  And over that five year span the average household size most likely fell, requiring additional units.  Were 50,000 new units constructed in Toronto?  I think not.

Rising interest rates will take care of the price of a house.  It's a simple mathematical relationship.  People won't spend more than a certain amount of their income on housing.  When rates rise, interest cost goes up, principal payment goes down; therefore, house value falls.  However, it doesn't cost any less to own the home.