UK house prices were 1.1% higher in December than a year earlier – the first annual rise since March 2008, according to the Halifax.
Prices rose by 1% in December compared with the previous month, marking the sixth consecutive monthly rise.
The Halifax, now part of Lloyds Banking Group, said the average home was now worth £169,042.
However, the group predicts that property values will be flat in 2010 owing to the economic outlook.
The figures show that prices have picked up steadily in recent months, having risen by 9.4% – or £14,552 – from the trough of April 2009. This followed a decline of 23% between August 2007 and April 2009.
This increase was driven, in part, by a shortage of the number of properties being put on the market. If potential sellers decided to put their homes on the market this would flatten any future pick-up.
“The prospects for the market this year will depend on how the UK economy evolves and whether there is a significant increase in the supply of properties for sale,” said Halifax housing economist Martin Ellis.
The Halifax calculates its annual price change by taking an average of the past three months, in order to smooth out any short-term price fluctuations.
However, the change in average prices for the specific month shows that the typical price in December 2009 was £169,042, compared with £160,070 in December 2008 – a 5.6% rise.
In its house price index published last week, the Nationwide said that house prices had risen by 5.9% in 2009, with the average home worth £162,103.
The UK’s largest building society has also predicted that prices will show little change in 2010.
Both the Halifax and Nationwide said unemployment figures had not been as bad as had been expected in 2009, which had helped demand for homes.
The Halifax survey showed that prices were 3.5% higher in the final quarter of the year compared with the last three months of 2008.
Mr Ellis said that values had also picked up partly as a result of the increased affordability of mortgages.
“The significant cut in interest rates following the worldwide financial upheaval in the autumn of 2008 has markedly reduced the burden of servicing a mortgage for many households,” he said.
Monthly home loan repayments accounted for 23% of a typical household’s income, continuing the low levels of recent months at their smallest since 2005.
But a separate survey by financial information service Moneyfacts showed that despite the Bank rate being kept on hold at 0.5% since March 2009, eight mortgage lenders had raised their standard variable rate (SVR).
The SVR does tend to track the Bank rate, but lenders are free to change it when they see fit. Many borrowers have chosen to revert to the SVR when their fixed-rate deal comes to an end, as it is often cheaper than remortgaging.
But Moneyfacts spokesman Darren Cook said it was possible that other lenders would also raise their rates.
“By increasing the SVR, lenders are actively trying to encourage borrowers to find a new mortgage deal, but many are unlikely to act until a significant base rate increase is a real possibility,” he said.
“In recent months providers have been forced to increase savings rates in order to raise funding in a very competitive market. Increasing the SVR may be the only way some can offset this cost.”
However, the lenders raising rates have tended to be smaller mortgage providers.
The latest decision on the UK Bank rate will be announced at 1200 GMT on Thursday, with no change expected.