House prices in Britain returned to modest growth in March after a fall in the previous month, although worries about the economy and household finances are likely to push prices lower in 2011, Halifax said.

The mortgage lender said house prices rose by 0.1 per cent on the month in March after a 0.9 per cent drop in February, slightly below the 0.2 per cent forecast. Prices fell by 2.9 per cent in the three months to March compared with a year ago, worse than the -2.7 per cent forecast.

"Uncertainty over the general economic outlook and individual financial circumstances are likely to constrain housing demand, resulting in some modest downward pressure on prices," said Halifax economist Martin Ellis.

Halifax said the average price of a house stood at £162,912 in March. It expects prices to fall by 2 per cent during 2011.

Most economists agree that house prices will dip this year as tight credit conditions, high unemployment, low wage growth, public cuts and the fragile economic recovery deter homebuyers.

Mortgage approvals are still running at around half their long-run average, despite record low interest rates of 0.5 per cent.

Economists expect the Bank of England to keep rates on hold tomorrow to try to bolster the recovery, despite inflation running at more than double its 2 percent target.

Reuters