Housing sales dropped by 30 per cent nationwide last month, largely due to a new tax in British Columbia and Ontario experts say deterred home buyers in two of the country's hottest housing markets.

The Canadian Real Estate Association on Monday reported a 6.8 per cent drop in home sales through its MLS service, compared with June numbers. The decline is part of a gradual dampening of Canada's once-booming real estate market.

B.C. and Ontario account for roughly 85 per cent of the slump, as the implementation of the harmonized sales tax this summer pushed many home buyers to purchase earlier this year, the association said in a statement.

The two provinces typically represent more than half of the country's sales.

"Canadians were anticipating this change and it affected the sale of their home or the purchase of their home, and they decided to make that sale earlier than expected," said the CREA's Alyson Fair.

The decline also comes on the heels of an interest-rate hike as well as tighter mortgage rules, which may contribute to an even softer market in the months ahead, experts said.

Experts are forecasting that average home prices will drop by about 10 per cent.

"We've come over a hump in prices and we're moving down into a valley," Grant Bishop of TD Economics told CTV News. "And we'll be going downhill probably until mid-2011."

But others say the real estate market is far from bottoming out.

"We're not seeing a huge slide," BNN's Andrew Bell told CTV News Channel on Monday.

"Things were pretty frenetic last year… We're actually still up year-on-year on sales, prices are holding -- so we're not seeing a dive in the housing market by any means."

So far, this year's sales are up 5.6 per cent from the first seven months of 2009. But experts predict that lead to fade in the next few months, since sales grew dramatically in the second half of last year.

Activity peaked last December as home buyers who had held off during the recession let loose on the market and took advantage of low interest rates.

That momentum lasted through the first half of this year, fuelled by fear of the HST, interest rate hikes and changes to mortgage rules.

Still, sales fell in six of the last seven months, dropping 25 per cent in the past three months alone, said Douglas Porter, deputy chief economist at the Bank of Montreal. That signals a shift towards a buyer's market, he added.

British Columbia showed the largest decline at 14.1 per cent, with Ontario in second place with an eight-per-cent decrease. Activity in the Prairies and Quebec was level with June numbers.

"We (and many others) were consistently warning of a significant second-half slowdown in housing activity but, if anything, the cooling looks even a bit chillier than expected," Porter wrote in a report Monday.

With files from The Canadian Press