The buoyant housing market helped the Skipton Building Society to "abnormally good" record profits last year, says the organisation's chief executive.

Pre-tax profits rose by a third to £79.7 million and group assets rose by nearly 11 per cent to £8.1 billion.

The Skipton group consists of the building society and 15 trading subsidiaries like newly-added MLP insurance services, Jade Software and the Private Health Partnership.

Last year, the group's estate agent, Connells, reported record profits of £30 million on the back of a vibrant housing market and the successful integration of the Sequence chain of estate agents.

Skipton chief executive John Goodfellow said: "The housing market has been key to the group's success in 2004. For the society as a lender with competitive products it has generated £1.4 billion of lending and Connells has grown profits by more than 50 per cent year-on-year.

"These figures are abnormally good for the sector and, with a quieter market already, 2005 will be more challenging than 2004 with profitability in the estate agencies returning to historically more normal levels."

Mr Goodfellow said within the core business both mortgages and investments had risen by more than 13 per cent. Arrears remained historically low with just seven properties in possession at the year end.

"Considering member value, Skipton is among the leaders in the field," added Mr Goodfellow. "In July, we replaced our concessionary mortgage discount scheme with one of the lowest standard variable rates on the market, currently 6.09 per cent. Our net interest margin at 0.76 per cent is, I believe, the lowest in the sector. Our products have appeared in nearly 100 best-buy tables."

Last year, the Skipton was the only building society to get the Financial Adviser Five Star Award, which it has won five years in succession.

But Mr Goodfellow predicted 2005 would be much more challenging.

"However, our focus delivering competitive products and first class service will ensure the society remains at the forefront of the industry and continues our record of proving superior benefit to our members whilst maximising efficiency and profitability across the group," he said.