Property prices rose by 1.7% in July compared the biggest monthly leap in value since July 2004, according to the latest report from the Land Registry.

The report says every region recorded a monthly rise in prices, and the average property is now valued at £155,885. But prices were still 11.7% down year-on-year.

The annual drop has been sharpest in the North East and least dramatic in Wales which saw the biggest month-on-month rise of 3.1% in July from June whereas prices rose by just 0.9% during the same period in Yorkshire and the Humber.

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The biggest drop in sales came at the top end of the market, the Land Registry also found, in the £1.5m to £2m bracket. Some 38 were sold in this price range in May compared with 88 in May 2008, a fall of 57%. The number of homes sold at more than £1m in the same period fell from 453 to 242, a drop of 47%.

Despite this positive report, many economists are convinced the market is not yet out of the woods: ‘Having fallen some 17% over the past 18 or so months, house prices are now rising,’ said Seema Shah from Capital Economics.  ‘However, the still exceptionally-low levels of activity, coupled with the weak economic backdrop and tight lending criteria, suggest that any revival in UK house prices will be temporary.’

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