Other recent surveys have indicated the market is cooling

The Office of the Deputy Prime Minister (ODPM) said prices rose by 12.6% in the year to the end of March, up from a rate of 10.5% the previous month.

However, analysts said it was unlikely that the housing market was set for a renewed surge in prices.

Recent surveys from mortgage lenders the Halifax and Nationwide have shown annual house price inflation falling.

Going up

The average cost of a home rose to �183,346 in March, up from �179,491 in February, the ODPM said.

House prices are fluctuating around a broadly softening trend Howard Archer, Global Insight

House price inflation rose in every part of the UK except Yorkshire and Humber, where it dipped to 16.9% from 18.2%.

The highest inflation rate was in Wales, which saw a rise of 22%, while the north-east of England saw a rise of 19.4% and prices in the north-west climbed 19.2%.

The lowest rate was recorded in the south-east of England, where prices rose by 8.1% over the year.

Recent surveys from mortgage lenders such as the Halifax and Nationwide have indicated that the housing market has slowed in recent months.

On Friday, the Halifax said that prices had remained unchanged since the start of the year, while in its latest survey the Nationwide said the overall trend remained "broadly flat".

The Halifax survey saw annual price inflation fall to 7.8% in April from 9.7% in March, while the Nationwide said inflation fell to 7% from 7.9%.

Different methods

"House prices are fluctuating around a broadly softening trend," said Howard Archer, economist at Global Insight.

ANNUAL HOUSE PRICE INFLATION (MARCH 2005) England 12% (February - 9%) Scotland 16.2% (15.5%) Wales 22% (18.1%) N Ireland 15.8% (11.5%) Source: ODPM

"This seems likely to continue in the near future at least."

Sabina Kalyan, property economist at Capital Economics, also said that the market was unlikely to see rapidly rising prices in the coming months.

"With consumer demand already weak, indebtedness at record highs, and housing valuations looking stretched, we continue to expect the underlying trend in house prices to weaken further as the year progresses," she said.

The ODPM said the reason why its annual inflation figure for house prices differed from other surveys was because of differences in how the price indexes are calculated.

Unlike the Nationwide and Halifax surveys, which are weighted according to the number of transactions, the ODPM survey is weighted according to the total amount of money spent.

This means the ODPM survey is more influenced by the areas with the highest house prices - which tend to be in the south of England - and by the highest priced houses, which tend to be detached properties.