The UK housing market is well on the road to recovery following the difficult months of 2005 according to the latest monthly report from newly built homes website, SmartNewHomes.com.

The average price of a new home on the SmartNewHomes.com website, covering almost 90% of the new homes currently for sale in the UK, was £255, 065 in January 2006. This is 0.1% higher than the previous month and 0.3% higher than three months ago.

Although annually the average price is still down 2.4%, marking the tenth consecutive month of negative annual price inflation, prices are heading towards the highs of 2004, said the firm.

New home buyers showing renewed vigour

Demand prices, measured using the price homebuyers indicate they are willing to pay for a new home when searching on the SmartNewHomes.com website, have shown strong growth over recent months.

The average demand price is at its highest level ever, up annually for the first time in five months, 3.1% higher than the same time last year and 0.9% higher than last month. This suggests that consumer confidence in the market has returned and that activity will pick up over the following months. As a result, prices should experience more positive growth throughout this year.

Regionally, East Anglia, Greater London, Wales, Scotland and the West Midlands have experienced the strongest price growth over the last year with prices rising by an average of almost 10% in Scotland. The South West and North West however saw prices drop over the last year whilst the North, South East and Yorkshire and Humberside saw prices remain largely stable.

David Bexon, Managing Director of SmartNewHomes.com, comments: "These figures back up other industry reports on resale home prices and mortgage lending levels, combining to show that the housing market as a whole is picking up from a difficult year."

"Although compared to this time last year average new home prices are down, this negative inflation level is the lowest it has been for almost a year, and together with the other indicators, would suggest that the market is edging towards stronger growth later this year."

"The majority of the UK regions are seeing good steady price growth and this is likely to continue over the coming months with areas such as Wales, the North, Yorkshire and Humberside and the East Midlands likely to see prices increasing to bring them more in line with the rest of the country."

"The only concern for the new homes market remains the surplus of new apartments which again hit a new high this month in comparison to the proportion of detached and semi-detached homes being built. This remains an issue which is in the government’s hands to resolve through allowing planning regulations to be more flexible in response to local criteria and demand."

Central England aspiring to a rural escape

Figures tracking migration between UK regions shows that new homebuyers are moving out of the central regions (London, East Midlands, West Midlands) and moving in to areas such as Scotland, the South West and the South East, looking to escape city life in favour of more rural areas.