Confidence appears to be improving in the UK housing market, with prices up by 2.2% in the 12 months to January 2013.

Costs have remained relatively stable for residential property in most regions, although some are performing better than others, according to the latest figures from the Office for National Statistics.

But house prices actually fell month-on-month by 0.7%, meaning the annual rise to January is down from a 3.3% increase in the 12 months to December 2012.

England recorded annual price growth of 2.4% on average. The East and the North East experienced strong rises of 3% and 2.2% respectively, while the South West, which recently topped survey of places where Britons would most like to live, recorded the weakest growth, at 0.1%.

London, which has enjoyed strong interest from wealthy overseas buyers, experienced a 5.5% year-on-year increase in house prices.

Meanwhile, prices were up by 0.9% in Wales, although they dipped by 5.4% in Northern Ireland and 0.2% in Scotland.

Excluding London and the South East, UK house prices increased by 1.2% in the 12 months to January 2013, rather than 2.2% overall.

David Brown, commercial director of LSL Property Services, said the increasing house prices represent improved confidence in the housing market.

However, he was quick to point out that a significant number of prospective buyers are still feeling the financial squeeze as they look to meet lenders' deposit requirements.

"The average first time buyer in the UK will have to shell out around £3,500 more for their first home than in January last year," he explained.

"As a result, to put together just a 20% deposit, new buyers will have to save nearly £60 pounds a month extra just to keep up with rising prices at a time when inflation is growing once again."

Prices paid by first timer buyers in January 2013 were an average of 2% higher compared with January 2012. For the same period, prices increased by 2.2% for existing owner occupiers.

Commenting in the figures, James Mackenzie, head of Strutt & Parker's Country House Department, says: "There is a sense of renewed confidence this spring which is shown in these figures and we are seeing more conviction and purpose within the market. It is also encouraging to see house prices in the North experiencing growth, as this is an area which has lagged somewhat behind in recent years. When the new help-to-buy scheme for those struggling to find a mortgage deposit comes in, I expect prices to rise further."