East Anglia's housing market should be prepared for a slowdown over the next two years, an industry expert has warned, as national research showed average house prices dipped for the third month in a row.

Eastern Daily Press: Nick Taylor, founder of estate agents Hadley Taylor. Picture: Archant.Nick Taylor, founder of estate agents Hadley Taylor. Picture: Archant.

However, the ongoing shortage of homes is likely to insulate the market from major fluctuations as demand continues to outstrip supply.

Research from Nationwide Building Society showed house prices fell for the third month in a row in May - the first time this has happened since 2009. The 0.2% month-on-month dip in May followed decreases of 0.4% in April and 0.3% in March.

The regional figures for the first quarter of 2017 – the most recent Nationwide could provide – show that the average house price in East Anglia reached £216,687, representing a rise of 5.7% on a year before, but a dip of 0.9% on the final quarter of 2016.

Nick Taylor, founder of estate agents Hadley Taylor, said Norfolk house price growth had plateaued since the end of last year, a trend he expected to continue into 2018.

'It's going to be a big shock to the middle classes who have become addicted to the crack cocaine of property price inflation for the last six years or so, but that's the reality,' he said, adding that house buyers had hit 'an affordability ceiling'.

'When you have incredibly low wage inflation and people on average don't earn more than they did 10 years ago, it's impossible to see how they can afford ever more expensive houses.

'For anyone with a child who is trying to buy a house, this [slowdown in house price growth] is not bad news. It will give their wages the chance to catch up with property price inflation,' said Mr Taylor.

Across the UK, the average price was £208,711 in May, marking a 2.1% year-on-year increase. A year earlier, price growth was more than double this rate, at 4.7%.

Martyn Baum, group residential manager at Arnolds Keys, said huge fluctuations were unlikely in the short-term, but that strong demand inside and outside of the region would mean 'strong and stable' house prices in 2017.

'There is some uncertainty with big things like Brexit which could have a knock-on effect, but I expect we will see smaller house price growth. If you are investing in property, you must do it for the long-term, but you have to see it as a home first,' he said.

Will Mullan, associate at Strutt & Parker, said the agency had seen a run of success with properties in good areas within Norwich, which had sold above asking price.

But he added: 'I don't think it's going to be an easy year for agents. It's about keeping people motivated and energised to sell.

'In the market we deal with, as long as properties are priced right they will sell. But sometimes the problem is cautious vendors, who decide to hold on until next year. It's certainly not all doom and gloom, but it could be better.'

Election uncertainty 'not to blame'

Despite prices falling recently, the shortage of homes nationally will mean an overall increase of around 2% in 2017, according to Nationwide's chief economist.

In May, the annual rate of growth slowed to 2.1%, the weakest in almost four years.

'It is still early days, but this provides further evidence that the housing market is losing momentum,' said Robert Gardner.

'Moreover, this may be indicative of a wider slowdown in the household sector, though data continues to send mixed signals in this regard.'

However, Mr Gardner said that 'if history is any guide', the slowdown is unlikely to be because of uncertainty over the general election on June 8. 'Housing market trends have not traditionally been impacted around the time of general elections. Rightly or wrongly, for most home buyers, elections are not foremost in their minds while buying or selling their home,' he added.