Before Christmas, posters shot up all over the London Underground informing commuters that the “most exciting property hot spot in the UK” was not Wimbledon or Guildford, but Corby in Northamptonshire. The campaign’s boast of “more room to breathe” must have amused the few commuters familiar with the declining steel town and its reputation for antisocial behaviour and economic deprivation. The accompanying photograph, of suburban lounge furniture arranged in an idyllic field, was even more at odds with the town’s image.

The campaign’s claims are not as overblown as they might seem, however. A long-promised railway station, envisaged as part of the new Midland Mainline rail franchise, will bring Corby and its hinterland, including some of the most beautiful stone villages in the Midlands, within 70 minutes of London St Pancras. The final decision will be made later this year, but town officials are privately confident that Corby will have a direct hourly service to London by 2009.

The area is also earmarked for the construction of about 28,000 new homes over the next 15 years. Bob Lane, chief executive of the regeneration company masterminding the town’s rebirth, wants to ensure it provides the mix of housing that will attract the middle classes.

“The town has an image problem,” Lane admits. “But we can only change that by changing the reality. We are trying to make sure the quality of housing supplied — as well as the shopping and education on offer in the town — meets people’s aspirations.”

Among improvements under way are a vast new £35m shopping centre, which should attract some well-known high-street names; a Norman Foster-designed secondary school, Corby Academy, due to open in 2008; an Olympic-sized swimming pool and a five-floor “civic hub” called the Cube, containing a new library, theatre and cultural centre. The real hope for the town’s improvement, though, lies in the Priors Hall project, a plan to extend the town to the east with the building of 5,100 new homes. Chris Mallender, the council’s chief executive, believes it will transform Corby’s “external image and perception”.

For the moment, however, Corby has none of the character of the small villages that surround it. Most of its housing stock consists of 1950s and 1960s detached and semidetached homes, built to house hundreds of Glaswegians, who moved south to work at the town’s steelworks.

The local property market’s main distinguishing characteristic is price. Four-bedroom detached houses can be had for as little as £177,000 at the “new residential community” of Oakley Vale on the edge of the town. Land regeneration firm Cofton claims that sheer value is now drawing buyers to these executive-style homes from across the Midlands and the south.

Sheridan Baker, a 29-year-old recruitment consultant, bought a three-bedroom house in the scheme two years ago for £149,950, having moved from Milton Keynes, where a similar property would have cost £240,000.

“When we came here and realised all of the regeneration that was happening — the new town centre and the civic hub — we thought it would be an excellent investment and that house prices would quickly go up,” she says.

The real beneficiaries of Corby’s regeneration schemes may well be villages in the surrounding north Northamptonshire countryside, which are reminiscent of those in the Cotswolds, but without the 4x4s and coach parties.

In Upper Benefield — a pretty village about 10 minutes’ drive from the proposed new rail station — a Grade II*-listed five-bedroom farmhouse is on the market for £525,000. Other villages, such as Rockingham, Great Easton and Cottingham, offer chocolate-box charm at equally bargain prices: a stunning four-bedroom windmill conversion in the centre of ancient Cottingham is on the market for £325,000, while just over the border into Leicestershire at Great Easton — still only a 10-minute drive from the proposed new station — a detached 300-year-old three-bedroom stone cottage is on the market with a price tag of £450,000.

“There is a massive shortage of properties in these villages, especially in Cottingham and Middleton,” says Chris West, a partner at Simpson West, a Corby estate agency. “Anything that comes up for sale there is generally sold within a four-week period, and usually within a couple of days.

“About three years ago, you could buy a three-bedroom detached home in one of those villages for between £140,000 and £150,000. The price now would be about £220,000.”

The shortage is aggravated by the fact that Rockingham — a beautiful village perched on an escarpment about two miles northwest of the town centre — is entirely owned by the estate of the local stately home, Rockingham Castle. Cottages there are either tied or rented privately.

West says that in his three and a half years in the area, only one Rockingham property, a new-build bungalow on the edge of the village, has come up for sale. Rockingham is so popular, he says, that there have been cases of local people selling four-bedroom houses in villages further afield to rent there instead, typically paying about £650 a month for a tiny two-bedroom cottage.

A rail station at Corby would increase competition for the few houses that come up for sale in the most popular villages, he says, even though the main problem facing the area remains the lack of facilities, including shops, in Corby itself.

On the market

- A former windmill in the attractive village of Cottingham is for sale for £325,000. It has four bedrooms, a circular living room and a large garage. Simpson West, 01536 202 007, www.simpsonwest.co.uk

- This two-bedroom cottage has three bathrooms, but is in need of modernisation. In Weldon, three miles from Corby, it is for sale for £245,000 with Murray, 01572 755 555, www.murrayestateagents.co.uk

Times recommends

• Second homes: credit crunch casualty or money-spinner?
• How I built my own sliding house
• Top 10 incentives for house buyers