Thursday, a monthly report from the Nationwide Building Society showed that UK house prices increased unexpectedly in March for the first time since October 2007. House purchase activity reached highest level since May 2008, the mortgage lender said.

House prices increased 0.9% on a monthly basis in March, reversing a 1.9% fall in February. Economists were looking for another 1.5% decrease for March. Annual decline in house prices was 15.7% in March compared to 17.6% drop in February.

Fionnuala Earley, Nationwide's Chief Economist said, while the rise in prices in March is welcome, it is far too soon to see this as evidence that the trough of the market has been reached.

In the first quarter, house prices were down 4.2% sequentially, slower than the 4.7% decline in the last three months of 2008. House prices plummeted 16.5% annually to GBP 149,709 in the first quarter.

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