British house prices have ended the decade 117pc higher, according to the Nationwide.

The performance over the Noughties was the strongest on record for British house prices in spite of the woes of 2008, the building society said.

Even with inflation taken into account, the average home increased by 68pc in value compared with a 14pc fall in real terms in the 1990s.

Over the past decade, Wales notched up the biggest rise in house values, with an 82pc hike in real terms, after inflation. England saw the weakest growth in the noughties after prices increased by 65pc.

Nationwide’s latest survey of house prices showed house prices rose by 5.9pc in 2009 as the UK property market bounced back from last year’s double digit declines.

The average cost of a UK home rose by another 0.4pc in December to £162,103, marking the eighth straight month of price increases.

The performance in 2009 is a surprise turnaround on the 15.9pc plunge in 2008 and comes despite the worst recession in the UK since the Second World War.

Martin Gahbauer, Nationwide’s chief economist, said the increase in house prices this year “surprised most commentators”.

“Few could have foreseen this development at the start of the year, when the near term price trend was still pointing to a repeat of the double digit annual decline experienced in 2008,” he said.

“Although house prices are still 12.2pc lower than their October 2007 cyclical peak, they have now rebounded by an impressive 8.9pc since their February 2009 trough.”

But the picture for 2010 is unclear, with a recent slowdown in price rises raising concerns over the sustainability of the market recovery.

December’s 0.4pc rise is significantly below rises of up to 1.4pc recorded in the summer.

Three month-on-three month growth rates – generally considered to be a smoother indicator of the underlying trend – also eased during December to 2.1pc from 2.8pc in November.

The past year was buoyed by “pent-up demand” as cash buyers not restrained by the credit drought entered the market, Nationwide said. Record low interest rates, a smaller-than-feared increase in unemployment together with recent stabilisation in the banking sector and signs of an economic recovery also acted as a boost.

While interest rates are expected to remain low well into 2009, there is uncertainty over the labour market and whether cash buyers can continue to support housing demand.

Mr Gahbauer said: “This year’s recovery has to some extent been driven by transitory factors and there are reasons to believe that it will lose momentum over the coming year.

“At the same time, there is no obvious catalyst on the near-term horizon that would trigger significant renewed falls in prices. At this stage, therefore, it seems likely that 2010 will see no significant house price movements in either direction.”

The group’s figures show that London saw the strongest growth throughout 2009, with the average home in the capital now costing £276,088 – 7pc more than it did a year ago.

Northern Ireland was the worst performing region, with prices falling 6.7pc to £137,949.

Carlisle in Cumbria was the best performing of all the UK towns and cities in 2009, with prices soaring by 10pc to £136,666.

Leicester suffered opposite fortunes, with home prices down 9pc to £141,643.

http://www.telegraph.co.uk/finance/economics/houseprices/

British businesses which have been devastated by the recent floods and are members of the Federation of Small Businesses (FSB) can apply for interest-free loans of up to £5,000 to help them through the crisis.
Emergency aid: the Federation of Small Businesses is offering interest-free loans to help companies through the flood disruption. Pictured are rescue personnel do a door to door search for trapped people in the High Street of Cockermouth, Cumbria on Friday.

The FSB has opened its Disaster Recovery Fund with a total of £500,000 to be made available to eligible members. The loans will be available to those members affected by the heavy rain and flooding in Cumbria, Lancashire, the North-East and Scotland.

“The past 18 months have been difficult for FSB members up and down the country, so the last thing otherwise successful members need is unpredictable weather and flooding to damage their prospects,” said John Wright, national chairman of the FSB.

He called on banks, local authorities and other institutions which have a bearing on the cash flow of small businesses to be “understanding and flexible.”

The FSB offered the same funding during the 2007 floods and crisis caused by the foot and mouth epidemic. It said about 94pc of loans were repaid, while the remainder were written off.

The loans will not be made available to businesses that were not insured, and companies will have to demonstrate their solvency prior to the floods.

Although it is too early for the Association of British Insurers to calculate the total cost of the floods to the insurance industry, it said the average cost of damage to domestic properties was currently between £20,000 and £40,000.

Elizabeth Couchman, senior product manager at Risk Management Solutions, added that the total damage is likely to be much smaller than the £3bn incurred during the 2007 floods.

“While the rainfall is creating devastation in the North-West and Scotland, the damage is likely to be far lower than in 2007 when 55,000 properties were damaged, causing £3bn of damage, compared to up to 1,000 homes impacted so far,” she said.

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/insurance/

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