The price of the average new-build rose to £197,504 over the year to May and this could be part of a growing trend with the annual price increase figure also at 4.2% in April, according to government completion figures.
The Communities and Local Government department warned that new-build prices remained volatile and Ian Gray, mortgage manager at Largemortgageloans.com, agreed the sector is recovering from a very low base.
“The sector suffered so severely in the downturn with valuations coming back at 30 to 40% less than the owner paid for it off-plan. This 7.8% uptick is probably putting the sector back in line with the rest of the market,” said Gray.
Many new-build projects also failed to complete after the crash, said Gray, so this could also reflect a supply issue in the market.
House prices fell in eight out of nine English regions but London powered on as the only region to see house prices rise annually to 1% over the year to May.
The largest falls at -4.2% came from the East Midlands, with the smallest in the East at -0.4%.
However, over one month in May the picture is a little different with a price fall of -2.2 in London and rises of 0.1% in the North East to 1.2% in the West Midlands.
Affordability improved at the bottom of the housing ladder, with prices paid by first-time buyers 2.1 % lower on average than a year earlier and 1.4% lower for all homebuyers.
In May overall, UK prices fell by 1.6% over the year with the average mix adjusted house price at £203,528.