House price rise and surge in shares brings 'ray of sunlight'

Property values went up 0.9 per cent last month, the first rise since October 2007, according to figures from the Nationwide. Experts described the rise as a "narrow shaft of sunlight" for homeowners after 18 months of almost unremitting gloom.

In the City the FTSE-100 index of leading businesses broke through the 4000 barrier for the first time since 20 February on hopes that the G20 summit will hasten an end to the worst global downturn since the Second World War.

By lunchtime the Footsie was up 86 at 4041 - 15 per cent above the trough hit on 3 March. It followed a 152-point rise in the level of the Dow Jones Index on Wall Street yesterday.

But it was the unexpected rise in property prices that provoked the biggest excitement on one of the most upbeat days for the economy since Northern Rock first got into difficulties a year and a half ago. Nationwide said the average price of a home in Britain rose £3,200 in March from £147,746 to £150,946. But the building society said it would be "unwise" to read too much into one month's figures.

Prices are still 15.7 per cent below their level in March last year and 19 per cent from their peak level.

Property commentators said that prices will start to stabilise as confidence returns to the market. Peter Rollings, managing director of estate agents Marsh & Parsons, said: "London's house price slump is at the bottom now. I don't for a minute think prices are going anywhere fast, but they should stop falling."

There was more good news from the Bank of England, which said there were signs that banks will soon start to relax about lending to consumers and companies. In its quarterly Credit Conditions Survey the Bank said that for the first time since the start of the credit crunch a majority of lenders expect to increase advances to households over the next three months.

Most banks have been hoarding their cash and refusing to lend over the past year and a half because of their huge losses. But a £1.3 trillion wave of taxpayer-funded bank rescue and support packages and a programme of "quantitative easing" finally appears to be thawing the frozen credit markets.

Amkit Kara, an economist at UBS in London, said: "You can't tighten your lending standards for ever. We may have reached a bottom for mortgages and lending to companies may kick off again too."

One of Britain's biggest high street banks HSBC said it was relaxing the terms of its best mortgage deals. From Monday borrowers will only have to find a 25 per cent rather than a 40 per cent deposit to access its best deals.

The high street also shared in today's optimism. Forecaster Synovate said it expected 4.1 per cent more shoppers this Easter fortnight compared with last year, the biggest rise in five years.

However, some commentators counselled caution on house prices. Nick Hopkinson, director of Property Portfolio Rescue, said: "Sales volumes are currently so low that the monthly house price statistics from any one single lender are virtually meaningless."