OUT with the old, and in with the new. Last year may have been the year of recession, but it provided one of the best ever for stock market investors.

Over the course of the year, the FTSE 100 provided capital growth of 22 per cent, and that is before taking into account returns provided by dividend payments.

The first two months of last year continued the annus horribilis of 2008’s falling market, before reaching a low on March 3 last year, with the FTSE 100 registering 3512. From there to the end of the year, the market posted a 54 per cent recovery.

Recovery statistics are a lag indicator, meaning that they tell us what has already happened. The important factor for investors is to attempt to find out what is happening in the present, in order to forecast what is likely to happen in the future.

The turning point for the market was the realisation in some quarters, that the extreme of the recession had peaked and that a recovery from recession was underway.

While a return to growth was always somewhat distant, the opportunity of obtaining shares at distressed prices on a longer term view, was outstanding.

Although the recession statistics only showed the last quarter of 2008 as officially the start of the recession, the credit crunch had actually started more than a year earlier, so the downturn had been longer than historical precedents.

So, what started the downturn? The simple answer is property values.

The bubble burst in 2007, both in the US and the UK.

Anything dependent upon stable or rising property values then fell in value.

Property is the most significant purchase of any individual, and usually with the help of borrowed money.

The effect of falling asset values had a geared effect of destroying equity value in property.

Residential property prices stabilised and returned to growth in February last year. This was dismissed as a blip by the ignorant, but the blip continued in force for the rest of the year.

Victims of the fall in property values were banks.

Clearly, as loan-to-value levels went negative, bad debts would need to be recognised. Like a playground bully, the Government decided to kick them when they were down, as they were no longer providing the lucrative tax revenue the Government liked to spend in advance.

The government deficit caused by its spending binge was then conveniently blamed on bankers’ bonuses.

What profits a currency trader operating on behalf of the bank’s corporate clients has to do with a buyto- let investor’s repossession bad debts, did not deflect the Government from using them as a convenient scapegoat.

Property may be the key theme this year. While last year was clearly a time for stabilising commercial property values and recovering residential property values, the main sectors which could see happier times in 2010 are those in which the trend continues. Banks, house builders, estate agents and commercial property companies could be in for a happy new year.

As usual, there can always be a sting in the tail. The spectre of higher interest rates may have a negative effect. This is worse for bond investors though, particularly government bonds if the Bank of England no longer covers the government deficit. The flipside of this could see a switch from bonds to equities, chasing remaining value higher.

■ Anthony Platts is a divisional director in the Teesside office of Brewin Dolphin, and can be contacted on 0845-213-1340. All prices quoted in the article are from public sources. The views expressed are not necessarily held throughout the Brewin Dolphin Group. You should bear in mind that no investment is suitable for all circumstances and it is important to seek expert advice if in any doubt. Brewin Dolphin Limited is a member of the London Stock Exchange, authorised and regulated by the Financial Services Authority.