The B.C. Real Estate Association says “sharply” rising mortgage rates will slow down the housing market.

The association released its 2022 second quarter forecast Tuesday (May 31) on the eve of the anticipated third round of interest rate hikes by the Bank of Canada.

The BCREA expects home sales to fall over 22 percent this year compared to 2021.

“As markets adjust to the new interest rate landscape, we anticipate that prices may be somewhat volatile but will ultimately flatten out through 2023,” the association stated in a media release.

BCREA chief economist Brendon Ogmundson noted that B.C. housing markets are “now adjusting to a much different interest rate environment”.

“With mortgage rates surpassing 4 per cent for the first time in over a decade, the housing market over the next two years may have very little resemblance to the housing market of the past year,” Ogmundson said.

Based on the forecast, realtors across the province are anticipated to sell a total of 97,240 homes in 2022.

This is 22.1 percent lower than the 124,880 sales in 2021.

While the BCREA indicated that prices may become “somewhat volatile”, its forecast shows that the average price of a home in the province will post an annual increase of 11.5 percent.

The average price of a B.C. home in 2022 is anticipated to reach $1,034,400, up from the previous level of $927,558 in 2021.

Also, average price in 2023 is forecast to mark a 0.8 percent annual increase to $1,042,900.

The Bank of Canada is expected to announce Wednesday (June 1) a 0.5 percent increase in its interest-setting rate.

This will bring the central bank’s key rate to 1.5 percent.