Rising demand has levelled off prices in B.C.'s plunging real estate market. (CBC)

Plunging prices in B.C.'s residential real estate market are levelling off, according to the latest forecast issued by the British Columbia Real Estate Association.

"The majority of the decline in home prices has already occurred," said association chief economist Cameron Muir, in a report released on Tuesday.

"Balanced markets are emerging in Victoria, Vancouver and the Fraser Valley. There's now little downward pressure on home prices in these areas," said Muir.

As a result, the real estate association has revised its forecast for the year, predicting the average listed price for a residential property in B.C. will decline eight per cent to $420,600 in 2009, instead of 13 per cent as originally forecasted at the beginning of the year.

Prices have stabilized because of increased demand, with seasonally adjusted home sales raising over the past three months, according to Muir.

"First-time buyers were largely absent in the late fall and winter, making it more difficult for move-up buyers to sell their current homes. The chain of ownership is now being oiled," he said.

Lower home prices and record low interest rates have reduced the carrying cost of the average priced home 24 per cent over the last year, according to Muir.

"A significant increase in affordability has brought many first-time buyers into the market," he said.

Muir expects stronger consumer demand to continue for the balance of the year and residential sales in 2010 to climb 10 per cent.