The average price of a new home in the UK increased by 1.5% last month to £259,900 according to newly built homes website, SmartNewHomes.com.

This is 0.4% higher than at the same time last year and the first positive annual price growth for almost a year, said the report which covers new home form 85% of the UK market.

The report also records how much homebuyers indicate they are willing to pay for a new home, and reveals that this ‘demand’ price is at its highest level ever having increased 5.4% over the last year and 3.9% over the last month.

This significant return of consumer confidence provides further evidence that the current recovery in the market is sustainable and will result in further growth later in the year.

Mixed fortunes for regions

Across the UK, average prices have fluctuated over the last year. New homes prices have risen the most in Scotland, Wales, East Anglia and the West Midlands, with significant annual increases of up to 14%. The top priced regions of London, the South East and the South West have experienced a slight decrease in prices over the last few months compared to the strong rises seen in these areas in previous years.

The lowest priced regions (Yorkshire & Humberside, East Midlands, North, North West) have seen prices remain broadly stable, despite being the areas most widely tipped by property commentators as the potential ‘hotspots’ for this year.

The rise and rise of the smaller home?

The proportion of detached new homes fell to its lowest ever level last month, making up just over a quarter (27.2%) of all the new homes for sale whilst the relative quantity of apartments was 56.7%. The dramatic shift in building patterns over the last two years reflects increasing government pressure on house builders to construct smaller, denser units and an increase in urban regeneration and city centre developments.

David Bexon, managing director of SmartNewHomes.com, commented: "This month’s report is the most positive we have seen for a long time with all indicators signifying a substantial upturn in the market."

"The considerable increase in consumer confidence is the most encouraging indicator that the market is returning to sustainable realistic growth and, if seasonal price fluctuations follow, then average prices could potentially rise by up to another 5% by the autumn."