Various surveys have shown the property market to be picking up
House prices in England and Wales rose by 1.7% in July compared with June - the biggest monthly leap in value since July 2004, the Land Registry said.
Every region recorded a monthly rise in prices, with the average home valued at £155,885, the analysis found.
But prices were still 11.7% lower in July than they were in the same month a year earlier and sales were also down.
The annual drop in prices was sharpest in the North East of England but at its most shallow in Wales.
The Land Registry, which records all completed property sales in England and Wales, is widely regarded as producing one of the most authoritative house price reports, although it does lag behind data from lenders.
It compares the price of properties sold now with the price paid when they were sold previously. However, repossessions and property transfers following a divorce are excluded from the sample.
The annual fall in prices eased in July compared with June, when the year-on-year drop stood at 13.8%. This was at the lowest level in July since October last year.
The recovery in the housing market has been revealed in a series of surveys in recent months, including the Nationwide building society's index which is based on mortgage data, which this week revealed prices had risen by 1.6% in August compared with July.
This has proved to be bad news for tenants, who have seen rent levels rise again as former "reluctant landlords" put their homes back on the market.
However, the number of transactions remains relatively low, with some experts suggesting rising prices could stall if there is a surge of properties coming back onto the market.
There were an average of 35,848 sales per month between February and May this year, compared with 61,743 in the same period a year earlier.
The housing market slump was more acute for the owners of flats and terraced homes, as revealed in the latest figures.
The Land Registry said that the value of terraced properties fell by 12.9% and flats dropped by 12.7% in July compared with the same month a year earlier.
This compared with an 11.3% fall for semi-detached homes and just a 10.2% drop for detached houses.
On a national and regional level, the biggest month-on-month rise in property values came in Wales, where prices rose by 3.1% in July compared with June.
At the other end of the scale, prices rose by 0.9% during the same period in Yorkshire and the Humber.
The Land Registry analysis is one of the very few reports that maps out house prices changes at a local level.
It found that in the 12 months to July, prices fell the least in Ceredigion (down 8.4%) - where the average price was £161,279 - and fell the steepest in Luton (down 22.5%) - where the average home cost £118,195.
Those buying and selling some of the most expensive homes in England and Wales were not immune to the slump in activity in the housing market at the turn of the year, the figures also reveal.
The biggest drop in sales in the year to May - the latest figures available - came among properties 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%.
Meanwhile, more of the cheapest homes were being sold. Sales of homes which cost less than £50,000 rose by 50% from 508 in May 2008 to 760 a year later.