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Prospective buyers frustrated with B.C.’s red-hot housing market may be getting a cool-down — but not the kind they’re hoping for.

A new report released Tuesday by Central 1 Credit Union finds the provincial market in the midst of a mild recession that could last for the next three years.

The report said home sales are expected to track downward, however while prices may see some slight dips, they will remain high due to local economic drivers. A downturn in home construction and declining resale prices are also on track to continue.

“There’s going to be a period where there’s going to be very few sales, as buyers are looking to bid low but sellers are holding firm on what their asking prices are,” said Brian Yu, deputy chief economist with Central 1 Credit Union.

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The average price of a detached home in the region was $1.35 million in May, but it’s dropped to $1.27 million in recent months. Sales, meanwhile, are expected to fall about 23 per cent.

“The expectation is that we will see about a few percent drop off which will bring us down to $1.2 million. It’s still very high for a lot of households, for many it will be out of reach,” Yu said. “But we will also see a decline in the condo market which are clearly looking at higher supply levels.”

Yu said the downturn is being linked to the same factors that led the Canadian Real Estate Association to project further dips in 2019 sales on Monday, namely rising interest rates and strict mortgage stress test rules introduced this year, but also cited provincial regulations including the foreign buyers tax and the speculation and vacancy tax.

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Construction of new homes, or housing starts, are also forecast to dip next year as supply remains high across the Lower Mainland, falling from nearly 40,000 units built in 2018 to about 32,000 in 2019. That number is forecast to stay roughly the same in 2020.

WATCH BELOW: A new report released by Central One Credit Union predicts sales in the housing market will drop significantly next year, but as Jules Knox reports, prices in the Okanagan are not expected to follow suit.

1:49 New report on housing market says mild recession could last 3 years New report on housing market says mild recession could last 3 years

Resale prices are also set to take a dip by about two per cent to an average of $520,000, but that number is expected to hold through the next couple of years.

The report also says the apartment vacancy rate is holding steady at nearly 1.3 per cent provincewide despite crackdowns on short-term rentals.

Yu said prices could still fall slightly in the Lower Mainland and even Victoria over the next couple of years but held off from saying those dips would amount to the so-called bubble bursting.

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“In order for there to be a deeper crash, there would need to be a global economic recession, something that throws a lot of B.C. and the Lower Mainland out of work,” he said. “That’s not something we have in our forecast right now.”

READ MORE: Detached home value in Metro Vancouver expected to drop in upcoming assessments

The union said the projected slow period means buyers will be able to take their time while searching for a house, as they won’t have to worry about missing out on a sale while the market stagnates.

Sellers, meanwhile, will have to think about cutting their prices if they want to get their contracts signed, something Yu doesn’t foresee happening.

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“Our view is that there’s going to be a disconnect between buyers and sellers,” he said.

—With files from Emily Lazatin