The index revealed that house prices increased by 0.5% with the average home costing £164,751.

The quarterly house price measure showed a modest rise of 0.6% in March. Despite the upturn, Nationwide said that it expected house prices to move modestly throughout 2011.

Robert Gardner, chief economist at Nationwide said: “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.”

He added that demand is likely to remain fairly soft and that a rapid increase in the supply of properties looks unlikely.

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“Low interest rates and a stabilisation in labour market conditions have prevented a rise in forced selling, and the subdued market outlook is deterring many sellers from entering the market.

“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,” he explained.

Adam Challis, head of research, Hamptons International, said: “Across the UK, there continues to be some regional price variation, with the North of England and Wales, Scotland and Northern Ireland all faring worse over the year. In contrast, prices were up 2.1 percent over the year in London and even higher in the outer counties.

Challis said for he expected mortgage lending to remain in the doldrums for the rest of 2011.

“Alongside constraints on household budgets, this will prevent significant movement in house prices. However, our medium term view is that house prices are likely to improve into 2012 and beyond in line with a more sustained economic recovery.”