House prices increased modestly in March but the positive figures are unlikely to mark the beginning of a strong upturn for the market, Nationwide said today.
The 0.5% increase, which marked the third monthly increase within four months, left the average home costing £164,751.
Meanwhile, the three-month-on-three-month measure of house prices, which is regarded as a better measure of the underlying trend, also showed a modest rise of 0.6% in March.
But Nationwide found little cheer in the figures and warned that prices were likely to move modestly lower through 2011.
Robert Gardner, Nationwide's chief economist, said: "The outlook remains uncertain but, all things considered, this is unlikely to mark the beginning of a strong upturn in prices.
"The economy entered a soft patch at the back end of 2010, and there have been few signs of a strong bounce-back.
"The jobs market remains challenging and Nationwide's Consumer Confidence Index suggests that sentiment has fallen to an all-time low in recent months."
Mr Gardner said demand is likely to remain fairly soft and a rapid increase in the supply of properties also appears unlikely.
He added: "With the economic recovery expected to remain sluggish, the most likely outcome is that the property market will follow suit, with low transaction levels and prices moving sideways or modestly lower through 2011."
Annual house price inflation returned to positive territory in March, increasing 0.1%, which compared favourably with a 0.1% drop in February.
The Nationwide's poll is the first house price survey to report on the housing market in March.
Paul Diggle, property economist at Capital Economics, said the figures add to evidence suggesting house prices have found some stability in recent months but it was unlikely to be sustained over the medium term.
He said: "Not only is the market overvalued on most measures, but consumer confidence is low, public sector job cuts will see the labour market take a sharp turn for the worse later this year, and mortgage lending is extremely subdued.
"In short, the fundamentals of the housing market still look very weak."Reuse content