This was up from annual growth of 0.5% in February and compared to a monthly increase of 0.5% in March 2010.
The CLG’s latest figures showed that the average house price in the UK was £205,565 in March, 0.5% down over the three months to March compared with a 0.4% decrease in Q4.
House prices remained 4.8% off the peak of April 2008, but 10.9% above the low recorded in April 2009.
Regionally, there were stark differences in house price growth across the UK, particularly between the North and South.
The CLG highlighted that if London and the South East were excluded from the index, the average house price in March was £168,777, a decrease of -1.1% over the year.
Average prices in England grew 1.3% for the year to March, while Scottish house prices fell 0.7%. For the same period, Wales and Northern Ireland saw decreases in average prices of 2.5% and 13.9% respectively.
Four out of the nine English regions saw average property prices increase over the year, with the largest rise in London at 5.6% and the smallest in the East Midlands at 0.9%. The North East saw the largest annual fall of 5.3%.
On a monthly basis, six regions saw prices rise, with London again top with an increase of 2.4% and average property prices standing at £342,521, compared to the lowest average price of £130,407 in the North East.
Southern regions, including the East of England, London, the South East and South West, all had average prices above the UK average in March.
Nicholas Ayre, director of UK buying agent Home Fusion, said: “There is neither rhyme nor reason to the property market at present. Against a still grim economic backdrop, prices overall, according to this latest data, have risen over the past month and year respectively.
“What the CLG data underline categorically is the stark regional variations in prices. Prices in London, where supply is tight and demand relatively strong, are the polar opposite to those in Wales and Northern Ireland.
“The property market, very clearly, has fragmented into a series of micro-markets. It could be many years before we see the return of a property market that trends at a national level.”
Meanwhile, prices paid by first-time buyers in March dropped 0.3% to £150,011 compared to the same period of 2010 and an annual increase of 0.5% in February.
By comparison, former owner occupiers paid 1.4% more on average over the 12 months to March at £239,813.
Prices for new properties rose 10.7% to £197,117 on the same period of last year, while pre-owned dwellings increased by 0.2% to £206,232.
