You can read the whole report here (H/T to Nick for the find). Highlights:
New housing was largely absorbed, but too many households bought in and this will drag down demand for additional building in the years to come.Emphasis mine. A projection of 15% more drop, on top of the 10% plus we've already experienced from the April 2008 peak. That's likely a conservative projection. It's a long and thorough read, and I suggest you do read it, especially the rental equivalency section.
Over the long-term, the value of housing cannot exceed what households are able and willing to pay to live somewhere. House prices are necessarily tied to incomes.
An influx of wealth arguably provided the spur for anomalously poor affordability – even by B.C. standards. However, home prices must return to fundamentals over
the long-run. We project that the average house price will fall by approximately 15% relative to its current level over the course of 2009.
All in all, it's a very well balanced analysis from a bank with a good track record of having stayed out of the muck.
UPDATE: Roger continues to out do the big 5 economists with his no-spin graphic statistics analysis. Big time thank you Roger.
My personal favourite: She's a hot market, if you don't compare her to anything we've seen since 1999.