B.C.'s housing market is on the way back up, according to a report from economists at an agency that supports credit unions across Canada.

Central 1's B.C. Resale Market Housing Outlook 2019-2021 says cheaper mortgages, population growth and price declines are bringing buyers back to markets like those in Metro Vancouver after a downturn for most of 2018.

"Home sales have returned to more normal levels following over a year of policy-induced declines," said Central 1 deputy chief economist Bryan Yu in a statement.

Yu says the Lower Mainland, which was hit hardest by the 2018 downturn, has seen sales increase due to what he calls significant price declines and lower borrowing costs. He expects the trend to continue in 2020.

According to Central 1, the B.C. median home value for 2019 is $522,000, a 2.4 per cent decline from 2018. Yu expects the median home value to rise around four per cent in each of the next two years due to stronger sales.

Yu says increased sales in Metro Vancouver will make affordability issues more acute.

"Home ownership remains out of reach for many households," said Yu.

He blames the problem on insufficient construction of purpose-built rental building and the overall rising price trends over the past 10 years.

Rental woes

According to Central 1, affordability for renters won't improve in places like Metro Vancouver over the next two years.

Population growth, driven by international immigrants looking for work or post-secondary education, will drive demand along with stricter mortgage rules, which will push would be buyers to rent.

Central 1 says rental vacancy in the largest urban areas like Metro Vancouver, Victoria and Abbotsford-Mission is at 1.4 per cent.

The outlook from Central 1 is similar to forecasts from the B.C. Real Estate Association and the Canada Mortgage and Housing Corporation.