House prices increased by 0.2 per cent across the UK in March, according to property analytics business Hometrack, representing the first price rise in 20 months.
The increase was helped by increased demand from first time buyers, a scarcity of homes on the market and strong interest in properties in London from overseas buyers.
First time buyers boosted the figures prior to the end of the stamp duty exemption on properties between the value of between £125,000 and £250,000.
Temporary relief from the 1% tax on properties in this price bracket ended last month.
Hometrack’s survey highlighted a widening geographical gap in the property market.
While property prices in London increased by 0.5 per cent, prices in the South East, South West and East Anglia rose by just 0.1 per cent.
The rise in London was the largest monthly increase since April 2010.
In contrast there was little change in prices in the East Midlands, West Midlands and Yorkshire and Humberside, while Wales and the North of England saw prices fall.
There was a 0.1 per cent fall in prices in Wales and a slightly higher fall of 0.2 per cent in both the North East and North West regions.
Richard Donnell, director of research at Hometrack, said: ‘The divergence in the relative strength of the housing market in Northern and Southern England is set to remain.
‘While the stamp duty holiday had a clear impact on the market, the effect of what is ultimately a short-term measure will fade quickly in the coming months.
‘The net result is that we expect prices to track sideways in the short term with the outlook for the second half of the year hinging on households’ expectations for the economy and their incomes.’
Hometrack’s monthly national house price survey was based on data from 1,500 estate agents across England and Wales.
Last week Nationwide reported a 1 per cent fall in house prices on a year-on-year basis.
The building society said that the average price was £163,327, 0.9% lower than in March 2011.