The main impetus for growth came from London where prices grew by 0.7% during March and recorded the highest growth since February 2010.
Pricing levels also increased across the country with prices only falling in the North East.
The strongest growth outside of London was in the South East and East Anglia which both reported growth of 0.2%.
Richard Donnell, director of research at Hometrack, said: “Compared to a year ago, market conditions have changed.
“Lower mortgage rates as a result of the government’s Funding for Lending Scheme have supported increased activity and demand.
“The weakening pound and concerns over Cyprus and the Eurozone will only serve to further boost the flow of international funds into the capital.
“Looking ahead the continuation of the FLS together with budget initiatives aimed at supporting lending and demand for new housing, will only serve to support pricing levels.”
Supply over the last two months grew by 13% but by just 3.5% over the last six. Demand meanwhile, has risen by 19% in the last two months, slightly lower than the same period in 2012 (22.5%).
Donnell said: “The general improvement in market sentiment on the back of rising prices will be welcomed across the housing industry.
“However, while scarcity of homes, support for lending and new housing will all act as a support to pricing levels, the problems of affordability and deposit levels still remain serious impediments to a full blown housing market recovery.”
