The key factors during 2009

A huge financial burden lifted from millions of home owners

For close observers of the UK's property market, 2009 was a big surprise. Contrary to almost everyone's expectations, prices started rising in the spring and kept on going pretty much every month.

According to HM Revenue & Customs (HMRC) completed sales rose steadily too, from the rock-bottom level of just 41,000 in January to 90,000 in October 2009.

The sudden change in direction brought an end to the sharp downturn of the previous 18 months, in which the banking crisis led to a slump of about 20 per cent in the value of the average UK home.

Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors (RICS), has been equally surprised by this about-turn.

"Prices could have fallen further, but government policy has been successful, combined with low interest rates," he says.

"The rise in unemployment has been only half the level seen in the recession of the early 1990s, which has stopped some distressed stock coming on the market."

The key factor was probably the Bank of England's decision to take its base rate all the way down to 0.5 per cent by March 2009, in an attempt to stave off the recession and keep the banking system afloat.

This lifted a huge financial burden from millions of home owners, some of whom would otherwise have fallen behind with their mortgage payments and then been threatened with repossession.

Ed Stansfield of Capital Economics highlights other factors.

"The big influence was the relative resilience of labour markets, employment has been slow to fall, so there has been no drip-feed of forced sellers," he says.

A year ago the Council of Mortgage lenders (CML) decided not to make a public forecast of house prices for 2009. Its spokesman Bernard Clarke thinks that decision, repeated this year, is fully justified.

"It's a vindication of our decision not to forecast in such a volatile market," he said.

"No-one forecast the rise this year and it is difficult with such a thin volume of transaction to do something that is reliable."