House prices rose by 1.1% in March, following a brief standstill in February, according to Nationwide.

The annual rate of housing inflation now stands at 5.3%, its highest in almost a year, taking the average house price up to £162,083. However, high property prices combined with rising utility bills are expected to put the brakes on further rises towards the latter half of 2006.

Nationwide economist, Fionnuala Early said in a statement: "The strength of the housing market has become one of the major factors in the MPC’s reluctance to reduce interest rates. The pick up in prices in March continues the upward trend we have seen since the autumn