More than 1,600 homes were wrecked when Carlisle's three rivers burst their banks in January 2005. Many people thought that no one would ever want to live there again. But Stewart Swift, policy and partnerships manager at the Northwest Regional Development Agency (NWDA), compares what is happening in Carlisle with what happened in Manchester after an IRA bomb destroyed the Arndale shopping centre in 1996.

“In the same way that the bomb acted as a catalyst for regeneration in Manchester, the floods were a driver, a galvanising force which forced us to take a broader, fresh look at Carlisle,” he says. “Because Carlisle came into regeneration later, we can learn from how others did it.”

In Warwick Road, the area worst affected by the floods and one of the longest streets in the city, only nine properties sold in 2005. But recovery is clear: average sales for each of the next two years were a steady 25 and, even in the present difficult market, 12 have sold so far this year, with an average achieved price of £126,245.

Carlisle, with its 900-year-old castle, a cathedral dating back to 1122, a Roman fort and a long history of Border skirmishes between England and Scotland, is proud of its past, but is emerging as a major modern regional centre. There are widespread regeneration efforts and plans are under consultation to develop the airport as a key freight destination, with improved passenger links. A decision is expected after December. Crucial to the growth of the city, which has a population of just over 100,000, is the new £70 million University of Cumbria, which will amalgamate several colleges on one site. It will be built on the Viaduct Estate, between the West Coast Main Line railway and the River Caldew, the city's other rivers being the Eden and the Petteril.

Knight Frank's latest northern residential review predicts that there could be a shortfall of suitable properties for new residents over the next 20 years: “The greatest mismatch between supply and demand [is expected to be in] outlying locations such as Carlisle, or those on the periphery of Liverpool and Manchester such as The Wirral and Rochdale.”

“Our middle and top end of the market are holding up a little better than the lower end,” says Adrian Tod, a director at Hayward Tod Associates estate agents in Carlisle. “This is fuelled by a percentage of buyers coming in from outside the area who don't have to depend on getting a large mortgage.” Only a fortnight ago, he says, two buyers - one who worked in the City of London, the other from Manchester - got into a bidding war over an old rectory in the village of Arkleby. “It sits beautifully,” Tod says, “between the coast and the Lake District National Park, overlooking the Solway Firth, and in the end it sold for £495,000, a fraction over the guide price. There is money in the system for professional people who can go and get funds.”

Overall, property prices in Carlisle have risen 12 per cent since 2005, but have fallen, year on year, by 3 per cent, to an average of £130,771, against a national drop of 4.6 per cent. However, sales are down by 64 per cent and for flats the fall has been 78 per cent. Tod says that the only way that flats will sell is if they are priced at £100,000 or below: “We've got plenty of buyers registered but they are not impressed with the prices at this stage. Many of them are risking cheeky offers.” He tells of one flat block of 40 units where not a single one has sold; the development company has gone into receivership.That the modest number of flats in Carlisle are not shifting is a cautionary tale for those charged with the sensitive development of the city. In May, a new 12-strong Carlisle Renaissance Board was formed with this aim. Led by Bryan Gray, who also chairs the NWDA, it includes Chris Carr, Vice-Chancellor of the University of Cumbria, regeneration experts and local business people.

Victoria Farley, a new board member and the general manager of Hoopers department store, who came to Carlisle from Harrogate, says: “I simply want the city to realise its potential.”

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