Home prices in the Greater Toronto Area are “simply unsustainable” but there’s a only small chance the market will cool over the next year without policy intervention, according to a new report from TD Economics.

In its latest economic outlook released Thursday, TD said that homes in the GTA and surrounding area seem to be shifting away from market fundamentals and that without government intervention, or a big move in interest rates, “momentum is likely to keep the Toronto housing party going for at least a few more quarters.”

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“While the ongoing froth has raised the risk of a pro­nounced correction over the medium term, we see only limited scope for a cooldown in 2017-18. Next year will likely feature a modest ratcheting down in housing activity, as interest rates continue their upward trek,” TD added.

It noted that the effects of Toronto’s hot housing market -- where the average selling price surged 27.7 per cent year-over-year in February -- are spilling over into consumer spending. Purchases of household furniture and furnishings are on the rise, which is supporting retail and wholesale trade.

TD also said in its forecast that because of its importance to the Canadian economy, housing is the greatest domestic risk to future growth.