House prices in England and Wales rose 1.3 per cent on the month in July, government data showed, in a rare positive sign from the sluggish housing market.

However, prices were still down 2.1pc on the year, not far off June's annual drop of 2.5 per cent - the steepest decline in almost two years, the Land Registry said on Friday.

Surveys by lender Nationwide and property data firm Hometrack have given a much more muted picture of the housing market in July. The Land Registry said house prices stood at an average £163,049 ($265,224).

The only region to record annual house price growth was London, with prices rising 1.3pc over the last year. House values in north-east England suffered the biggest drop, down 8.8pc on the year and 2.3pc on the month.

The number of house sales decreased since last year, with average monthly sales falling to 46,870 in May this year from 52,170 in May 2010.