Surprise increase in house prices

The cost of a home in the UK increased by 0.9% during the month, pushing average values back up above the £150,000 threshold to £150,946, according to Nationwide.

The surprise increase also led to a reduction in the annual rate at which house prices are falling, with this easing from a record 17.6% in February to 15.7% in March.

But the group cautioned against reading too much into the monthly price rise, saying that it was "far too soon" to see it as evidence that the trough in the market had been reached.

Fionnuala Earley, Nationwide's chief economist, said: "The Bank of England has already taken strong measures to ease the tensions in economic and financial markets by cutting rates and commencing quantitative easing. However it will take time for these to work through into the housing market before we can expect a sustained recovery in house prices."

The figures add to the recent positive news on the housing market, coming just days after the Bank of England said the number of mortgages approved for house purchase jumped by 19% during February.

The Royal Institution of Chartered Surveyors also said that interest from potential buyers rose for the fourth month in a row during February, while property intelligence group Hometrack reported a slowing in the rate of house price falls during March alongside a rise in sales.

Economists have greeted the recent run of good news cautiously, warning that, although the housing market may have turned a corner, a sustained recovery in prices was still likely to be some way off with the economy in recession and unemployment rising.

Ms Earley said: "It is still too soon to say that this will be the beginning of sustained house price rises and a reflection of a wholesale return of confidence to the market."

She added that the current upturn in activity was likely to reflect the return of buyers who had delayed purchasing a home during the worst of the financial turbulence at the end of last year.