Closing post
Time to wrap up….. here are today’s main stories:
Three water company bosses have given up their bonuses in an acknowledgment of the public anger over companies’ dumping of sewage in Britain’s rivers.
The chief executives of Yorkshire Water and Thames Water as well as the owner of South West Water have declined to accept bonuses this year.
Water companies have been criticised for raking in profits and their executives receiving large pay packets while sewage has regularly been released into Britain’s rivers and seas in large quantities.
Nicola Shaw, of Yorkshire Water, said she understood the “strength of feeling” on river pollution and had decided to refuse what would have been her first bonus since joining the company in May 2022.
More here:
Back in the UK housing market, online estate agent Purplebricks has reported a further worsening in trading.
Purplebricks, which put itself up for sale in February after a profit warning, said client instructions did not increase in recent months as expected, which will drag down revenues and earnings this year.
Shares in Purplebricks have tumbled 63% so far today.
FT: Activision Blizzard hires legal heavyweight Pannick to fight UK’s block of Microsoft deal
Activision Blizzard has hired legal heavyweight Lord David Pannick KC to lead its fight against the UK competition regulator’s decision to block its multibillion deal with Microsoft, the Financial Times reports.
Pannick, whose recent cases include Boris Johnson’s “partygate” probe, is one of the UK’s top lawyers, having previously represented Queen Elizabeth II, former BBC director-general Mark Thompson, and Shamima Begum.
Pannick of Blackstone Chambers, described by a legal guide as an “undisputed leader at the bar”, will represent the creator of the hit video game Call of Duty in its legal challenge at the Competition Appeal Tribunal, according to people familiar with the hire, the FT says.
The move comes a fortnight after the UK’s Competition and Markets Authority ruled that MS’s $68.7bn (£59.6bn) deal to buy Activision Blizzard, would result in higher prices and less competition for UK gamers.
In response, Activision accused the UK of being “closed for business”.
Over in parliament, the government has pledged it will not change the Bank of England’s 2% inflation target.
Financial services minister Andrew Griffith told MPs that the government was working with the central bank to ensure fiscal and monetary policy both work to bring down inflation.
Griffith told Treasury questions:
“We will continue to work closely with them (the BoE) to ensure that monetary and fiscal policy are well coordinated.
And the chancellor reconfirmed the inflation target of 2% at the Autumn Statement and confirmed this government will not change the target.”
Last August, during her leadership campaign, former PM Liz Truss said she wanted to change the BoE’s mandate to make it better at fighting inflation.
Wall Street opens lower
In New York, shares have opened in the red as investors continue to fret about the US debt ceiling deadlock.
The Dow Jones industrial average, which tracks 30 large US companies, has dipped by 73 points, or 0.22%, to 33,544 in early trading.
The broader S&P 500 index has lost 0.45%, while the tech-focused Nasdaq Composite – which exited a bear market yesterday – is down 0.5%.
US president Joe Biden is set to meet congressional leaders from both parties today, in the hope of resolving the deadlock over raising the borrowing limit of the world’s largest economy. Without a breakthrough, the US could default from early in June.
King breaks ground for new laboratory to help achieve net zero aviation
Over in Cambridge, the King has broken ground for a new laboratory that aims to speed up the development of net zero aviation in his first official engagement since his coronation.
Charles swapped his new crown for a trusty spade as he toured Cambridge University’s Whittle Laboratory, which has recently secured funding to develop a new £58 million lab.
As he walked to perform the ceremonial breaking of the ground, where a lump of mud was already visible on the grass, he joked:
“I don’t suppose it’s already been done?”
“It’s very unfair. I was rather looking forward to doing a bit of gardening.”
The new Whittle Laboratory is designed to become the leading global centre for disruptive innovation in net zero aviation and energy, bringing together experts from research and industry.
It aims to halve the time it takes to develop key technologies towards net zero aviation and energy, which can typically take six to eight years to reach the point of being considered for commercial use.
Professor Rob Miller, Director of the Whittle Laboratory, says the new project can help the UK reach net zero.
“We need to completely transform the innovation landscape in the aviation and energy sectors if we are to reach net zero by 2050. The new Whittle Lab has been designed as a disruptive innovation laboratory targeting the critical early stages in the lifecycles of technologies, where there are windows of opportunity to translate scientific strengths into global technological and industrial leadership.
“The Lab is designed to work at the intersection of cutting-edge science its emerging engineering application, providing fast feedback between the two, and dramatically cutting the time to deliver zero emission technologies.”
Updated
Workers on London’s Elizabeth Line will take industrial action later this month on the first anniversary of its opening, in a long-running dispute over pay.
The Transport Salaried Staffs Association has announced that its members will strike on May 24, the first anniversity of the opening of the line formerly known as Crossrail.
An overtime ban will be held too, from May 27 to June 4.
TSSA says that many staff on the Elizabeth Line are paid tens of thousands of pounds less than colleagues performing similar roles on other parts of the Transport for London (TfL) network, including London Underground and DLR.
Elizabeth line strike to hit on its first anniversary
— ianVisits (@ianvisits) May 9, 2023
➡️ https://t.co/gg0Cmfdc95
The core section of the Elizabeth line is likely to be closed on the day of its first anniversary, as Elizabeth line staff who are members of the TSSA union are to walk out on strike in a di... pic.twitter.com/VQXHQw0kXJ
Budget airline Ryanair has announced it has ordered 300 new Boeing 737 MAX aircraft.
The deal – which involves firm orders for 150 of the planes and options for another 150 – is worth more than $40bn (£32bn) at list prices.
The delivery of the aircraft between 2027 and 2033 will enable the airline to create more than 10,000 jobs for pilots, cabin crew and engineers, Ryanair said.
Energy bills to drop from July, experts say
Energy bills are expected to drop significantly from the start of July, according to new analysis released today, PA Media reports.
Energy industry consultancy Cornwall Insight said it thinks the price cap on energy bills will fall by more than £1,200 for the average household when it is next updated.
However, because the Government bill support, which has artificially lowered bills, will fall away, households will only be around £437 better off per year on average.
The analysts at Cornwall said they expect the price of electricity will drop to 29.55p per unit from the start of July from 33.2p today with Government support.
Gas prices will fall from 10.3p today – including Government support – to 7.55p from the start of July.
It will mean that the average household pays around £2,063 per year for their gas and electricity, though this will vary based on how much energy they use.
The price cap will be changed again in October to bring the average bill to around £2,098, before hitting approximately £2,163 next January. The current Government support means that average bills are around £2,500.
Dr Craig Lowrey, a principal consultant at Cornwall Insight, said energy suppliers might start offering more deals that lock customers into a fixed price for a year or more.
The drop in UK house prices last month was at odds to the usual moves this time of year, says Karen Noye, mortgage expert at Quilter.
But, considering the economic backdrop, the 0.3% drop in month-on-month prices in April is only small, showing that prices “remain resilient”, Noye adds, saying:
One element that keeps prices buoyant is an increasingly competitive rental market. Those that have managed to save enough for a deposit are increasingly finding that they can achieve the same monthly payments, if not less, by buying a property rather than renting even with higher interest rates.
This is helping the market avoid a situation where housing stock piles up because there is a lack of demand. This is evidenced by the news that Skipton Building Society is bringing back the 100% mortgage. This is the first time a product like this has been on the market since the financial crash and should help those trapped renting find properties even if they don’t have a deposit.
Housing may be a key battleground ahead of the next general election, Noye points out.
Homeowners will not want to see the value of their properties plunge while first time buyers who are gradually making up a larger and larger proportion of the voting population will not want to see huge house price increases like those during the pandemic.
Ensuring the right schemes are in place and more houses are built will need to be front and centre of any manifesto. The property market is in desperate need of some balance as it precariously navigates a difficult economic tightrope.
Updated
Novavax to slash jobs as Covid vaccine demand drops
US biotech firm Novavax is to axe one in four of its workforce in a cost-cutting plan.
Novavax, whose Covid-19 vaccine was the fifth to be approved in the UK, is cutting about 25% of its workforce, as the pandemic fades.
It announced the plan today, as it reported a net loss for the first quarter of this year of $294m, down from a net income of $203m in Q1 2022.
Total revenue for the first quarter of 2023 was $81m, down from $704m in the same period in 2022, which Novavax blames on “an emerging seasonal demand pattern for COVID vaccines”.
John C. Jacobs, president and chief executive officer at Novavax. says:
Reducing our workforce has been a difficult decision, but we believe it was necessary to better align our infrastructure and scale to the endemic COVID opportunity.
Though we still have substantial challenges ahead of us in 2023, we are encouraged by the progress we have made in the last quarter and are determined to continue executing on our top priorities.”
Last Friday, the World Health Organization (WHO) declared that Covid-19 was no longer a “global health emergency”.
Shares in Novavax have jumped over 6% in premarket trading.
*NOVAVAX TO CUT ABOUT 25% OF GLOBAL WORKFORCE pic.twitter.com/DB44xVYtpw
— IG (@IGcom) May 9, 2023
Updated
Shell shareholders should oust chair, says influential adviser
An influential investment adviser has added its weight to a move to oust the Shell chair, Sir Andrew Mackenzie, at next week’s annual shareholder meeting as a row over the energy company’s climate goals intensifies.
Pirc, which advises shareholders on how to vote at annual meetings, has recommended that investors vote against Mackenzie’s re-election and oppose its annual report to “hold board members to account”.
The Church of England has also said it plans to vote to oust Mackenzie, as well as recently appointed chief executive Wael Sawan, at the event at the ExCeL centre in London on 23 May.
Shell has faced repeated criticism from green campaigners who claim its climate goals are not ambitious enough and are not aligned with the target of limiting global heating to 1.5 degrees over industrial levels.
Shares in some US regional banks are under pressure again today, dropping in premarket trading.
PacWest Bancorp, the Los Angeles lender which came under pressure at times last week, are down 12.5% in premarket trading.
PacWest’s shares halved last Thursday, amid reports that it was considering a sale, before rebounding 81% on Friday.
On Friday, PacWest announced it will slash its dividend to just 1 cent per share, instead of 25 cents/share, due to economic uncertainty and banking volatility.
PacWest shares pared early gains, dragging down other US regional banking stocks, as the Los Angeles-based lender's decision to slash its quarterly dividend failed to stem worries about its financial stability https://t.co/QMjsOTTEe6 pic.twitter.com/bDYdT7VQzU
— Reuters (@Reuters) May 8, 2023
Western Alliance of Phoenix, Arizona, are down 6% in premarket trading, as investors feared the ongoing banking crisis could deepen.
Last week WA firmly denied reports that it was exploring a potential sale, as it shares tumbled 38% on Thursday before juming 49% on Friday.
Updated
US small business optimism deteriorates
Confidence among US small businesses has dropped, as bosses fret about the economic outlook and persistent workers shortages.
The National Federation of Independent Business (NFIB) has reported that its Small Business Optimism Index dropped by 1.1 points to 89.0 in April.
This is the 16th month running in which optimism has been below the long-term average.
“Labor quality” was the top business problem, cited by 24% of small business owners, followed by inflation at 23%.
🚨🇺🇸 #US #NFIB National Federation of Independent Business's Small Business Optimism Index dropped 1.1 points to 89.0 in April (down from 90.1), lowest point since 2013 Jan. It was the 16th straight month that the index remained below the 49-year average of 98.
— MacroMicro (@MacroMicroMe) May 9, 2023
📊 FREE Charting… pic.twitter.com/3TZI5NlMqw
NFIB chief economist Bill Dunkelberg says:
“Optimism is not improving on Main Street as more owners struggle with finding qualified workers for their open positions.
“Inflation remains a top concern for small businesses but is showing signs of easing.”
Skipton's zero-deposit mortgage launched for renters aspiring to be homeowners
A new 100% mortgage, aimed at potential buyers who can’t save for a deposit, is being launched today – the first since the 2008 financial crisis.
Skipton Building Society’s new “track record” mortgage is available for first-time buyers across Britain. Tenants aged 21 and over may be able to take out mortgages at between 95% to 100% of the value of the property they want to buy.
In return, they will need to demonstrate a strong track record of paying their rent, with evidence of a minimum of 12 months of rental history.
It is aimed those “trapped in rental cycles” and who do not have access to “the bank of mum and dad,” as my colleague Rupert Jones reported yesterday:
Some brokers have welcomed the move, saying it could help Generation Rent onto the housing ladder.
But there also concerns that the product could be risky, given the role of such 100% mortgage fuelling the housing market in the run-up to the 2008 financial crisis.
Without a deposit, borrowers would be pushed into negative equity quickly if prices kept falling.
As Graham Cox, founder at SelfEmployedMortgageHub.com, put it:
I’m amazed the Prudential Regulation Authority has given Skipton the go-ahead to launch this product.
“It’s like we’ve learnt nothing from the Global Financial Crisis in 2008. I understand the logic of trying to help those who are rent-trapped, and unable to save for a deposit, but to me, it’s addressing the symptom rather than the cause, which is that house prices are too high.
China’s imports fall in April as economic clouds gather
A surprise tumble in imports into China has fuelled concerns over the health of the global economy.
Chinese imports fell by 7.9% year-on-year in April, new government data released today shows, indicating its economic recovery stumbled last month.
That follows a 1.4% drop in the year to March, and economists had expected imports to be flat in April, year on year.
#China's economy and its #reopening are giving mixed signals.
— jeroen blokland (@jsblokland) May 9, 2023
- Chinese #imports fell 7.9% in April, raising questions about demand.
- After a brief uptick, China's Manufacturing #PMI has dropped below 50 again, while Services remain upbeat.
- Chinese #houseprices are rising… pic.twitter.com/CCa69WvA1H
China’s exports rose by 8.5% year-on-year, benefitting from a low base in April 2022 when pandemic restrictions were hitting production.
Analysts at ING warns that the deterioration of the global economy could weigh further on China’s economy as the year progresses.
On a monthly basis, exports fell 6.4% and imports fell 9.7% in April, points out Iris Pang, ING’s chief economist for Greater China, adding:
It seems increasingly clear that the global economic slowdown is weighing on China’s exports.
Today’s data also shows that China’s exports to Russia soared by 153.1% in April, while imports from Russia grew by over 8%.
Looks like 🇨🇳China’s trade with 🇷🇺Russia has risen somewhat! In first 4m of 2023, China’s exports +67.2% y/y, imports +24.8% y/y. Russia now 3.8% of total China trade. No surprise that trade with the EU🇪🇺, UK🇬🇧 & US🇺🇸 fell; trade with Taiwan collapsed. pic.twitter.com/c9C2m06Idn
— Tony Norfield (@StubbornFacts) May 9, 2023
This has hit the mood in the financial markets today, with Brent crude oil down 0.6% at $76.56 per barrel.
In London, the FTSE 100 index has dipped by 24 points, or 0.3%, to 7753 point.
What’s moving markets on Tuesday? pic.twitter.com/xmZnSWjJ87
— Victoria Scholar (@VictoriaS_ii) May 9, 2023
Updated
Sainsbury's cuts bread and butter prices
Sainsbury’s has cut the price of some of its lines of bread and butter following a drop in commodity prices, bringing some relief to struggling households.
The UK’s second-biggest supermarket chain has lowered the price of its own-brand 250g salted and unsalted butter by 5% to £1.89.
It is also cutting the price of its 800g Soft White Medium, Wholemeal Medium, Wholemeal Thick and Toastie White loaves of bread by 11% to 75p.
The grocer said it was able to lower some prices due to commodity prices for wheat and butter beginning to fall.
Rhian Bartlett, food commercial director at Sainsbury’s, said:
“We have been battling hard to beat inflation and whenever we are paying less for the products we buy from our suppliers, we will pass those savings on to customers.
“As we see the commodity prices starting to fall for wheat and butter, we’re able to lower our prices on two of the products people buy most often, bread and butter.
“We are committed to offering our customers the best value possible so they can be confident that they are getting a great deal on their everyday essentials when they shop with us.”
Britain's Sainsbury's cuts price of bread and butter. #Sainsburys https://t.co/brWBif4qfN
— Andrew Duncan (@andrewsduncan1) May 9, 2023
The UN’s Food Price Index shows that wholesale global dairy prices have dropped by 15% over the last 12 months, while cereal prices are almost 20% lower than a year ago (when the Ukraine invasion drove up agriculture prices).
Shoppers, though, have faced soaring food inflation. The latest UK inflation report showed that butter prices were up 22.7% in the year to March, with bread up 18.9%.
International tourism is well on its way to returning to pre-pandemic levels, according to the UN World Tourism Organization.
UNWTO reports that an estimated 235 million tourists travelled internationally in the first three months, twice as many as in the same period of 2022.
Overall, international arrivals reached 80% of pre-pandemic levels in the first quarter of 2023, it adds.
Insurer Direct Line said its earnings outlook remains “challenging” due to the soaring cost of claims – despite ramping up prices across its motor and home policies.
The group said it was seeing a further impact of the rising cost of motor repairs due to inflation, which is expected to put pressure on earnings this year, PA Media reports.
In response, it said it was hiking car cover prices, which pushed up average motor renewal premiums by nearly a fifth – 19% – year-on-year in the first quarter.
This led to a 2.5% fall in policies in the quarter, but premium price rises helped the motor division’s gross written premium lift 3.3% to £358.7 million.
The firm also said it was seeing “significant price increases” across the home insurance market, with its gross written home premium up by 2.1%.
Paving and landscaping firm Marshalls hit by housing slowdown
The slowdown in the UK housing market has hit Marshalls, the gardens, driveways and roofing products company.
Marshalls reported this morning that like-for-like sales have fallen by 14% so far this year, with trading weaker than anticipated.
The company, which sells garden paving and walls, paths and driveways, and owns roofing firm Marley, says this falls reflects the uncertain macro-economic climate, a reduction in new house building and continued weakness in repair, maintainance and investment by home owners.
Marshalls tells shareholders:
In the first quarter of the year, National House Building Council new housing starts were 27 per cent lower than 2022, which had an impact on the performance of all the Group’s reporting segments.
Marshalls now expects to miss its previous financial expectations for this year, citing the slowdown in the housing market.
It says:
The Board’s expectations for 2023 were set with reference to the Construction Products Association’s (‘CPA’) Winter forecast that was published in January 2023. The CPA reduced its 2023 construction output forecast earlier this month.
This was principally driven by a six-percentage point deterioration in new build housing to a year-on-year contraction of 17 per cent. The CPA cited reduced demand in the wake of the mini budget, the consequential sharp rise in mortgage rates and the end of Help to Buy as contributing factors for the downgrade.
Shares in Marshalls have dropped 15%, the biggest faller on the FTSE 250 index.
Updated
Tesco chair accused of inappropriate behaviour by four women
One of the UK’s most prominent business leaders, the Tesco chair John Allan, faces claims of inappropriate and unprofessional behaviour from four women, the Guardian can reveal.
Allan allegedly touched the bottom of a senior member of Tesco staff in June 2022, at the company’s annual general meeting (AGM). It is also claimed that he touched the bottom of a member of staff at business lobbying group, the Confederation of British Industry (CBI), at its annual dinner in May 2019, when he was the organisation’s president.
Sources allege that Allan, 74, made inappropriate remarks on those occasions as well as separate, similar comments to two other female members of CBI staff in November 2019 and in 2021 respectively. Some of the women said they were offended by the alleged actions and considered his behaviour to be sexual harassment.
Allan has denied all but one of the allegations – making a comment about a CBI staffer’s appearance that she found to be offensive in 2019. A spokesperson for Allan said the other claims are “simply untrue”.
A spokesperson for Tesco said: “John Allan’s conduct has never been the subject of a complaint during his tenure as chair of Tesco.” The company urged anyone with concerns or information to contact a confidential phone line.
Here’s the full story, by my colleague Anna Isaac:
Updated
While the overall UK housing market remains sluggish there are pockets of outperformance, points out Victoria Scholar, head of investment at interactive investor.
New-build prices and first-time buyers are remaining resilient, partly because of soaring rental costs.
Geographically, the West Midlands enjoyed the strongest annual growth of 3.1% while the South-East has seen property prices suffer.
Rising rates from the Bank of England and the cost-of-living crisis are squeezing individuals and families and are weighing on the UK property market, she adds:
Many potential buyers are holding off amid hopes that property prices will cool and mortgage rates will ease later this year as inflation starts to finally starts to come down.
The housing market is still reeling from the fallout from the mini-budget fiscal fiasco last year, which sent mortgage rates soaring and many mortgage products temporarily pulled from the market altogether. While the macroeconomic backdrop remains challenging, last year’s most dire forecasts have been wound back with the UK now expected to narrowly stave off a recession this year.
But with Brexit, inflation above 10%, recent political turmoil, and a sluggish economy, the UK property market is not considered the investment it once was by the international community.”
Updated
Bank of England may have to raise rates to 5% this summer, says Goldman Sachs
The Bank of England could be forced to raise interest rates to 5% this summer, Goldman Sachs has warned this week, as Britain struggles to bring down the highest rates of inflation among the G7 group of advanced economies.
Threadneedle Street is widely expected to increase the cost of borrowing for households and businesses on Thursday for a 12th time in succession, with financial markets anticipating a quarter-point rise to 4.5%.
However, the US investment bank warned that households and businesses could face further increases in the cost of borrowing as the central bank struggles to bring down the highest rates of inflation in 40 years to more sustainable levels.
House prices: what the estate agents say
The slowdown in annual house price growth to just 0.1% in April shows that the cost-of-living and mortgage worries are weighing on demand, says Jeremy Leaf, north London estate agent.
He adds:
‘However, there is no doubt that we are much busier than we were a few months ago and the underlying feeling is that we are over the worst and will continue on a relatively even keel despite some ups and downs along the way.’
Tom Bill, head of UK residential research at Knight Frank, says the UK housing market is “regaining its footing after being knocked sideways” by last September’s mini-Budget.
The big picture, Bill says, is that annual growth is broadly flat and transactions clearly hit their low-point in January.
It should be a steady year, with the impact of a recovering economy kept in check by mortgage rates that are notably higher than 18 months ago. It will also be the most predictable year for the housing market since 2018.
As the political temperature rises and a 2024 general election moves onto the radar, switched-on buyers and sellers are acting while the backdrop remains relatively uneventful.”
First-time buyers pay more, to escape rising rents
A newly built house would have cost you 3.5% more than a year ago in April, Halifax reports, much larger than the 0.1% rise in overall prices across the market.
Prices of ‘existing properties’ fell by 0.6% over the last 12 months.
The first-time buyer market is also proving to be “more resilient”, with average property prices up +0.7% over the last year, compared to a fall of -0.1% for home movers.
Halifax says:
One factor behind this difference may be that with rents continuing to rise sharply, it’s becoming increasingly cost effective to purchase a home, despite the challenge of raising a deposit and higher mortgage borrowing costs.
Higher borrowing costs & raising a deposit appear to be minor hurdles compared to the high jump that is renting. "The first-time buyer market proves to be more resilient, with avg property prices up +0.7% over the last year, compared to a fall of -0.1% for home movers" @halifax pic.twitter.com/WRXNHtyk91
— Emma Fildes (@emmafildes) May 9, 2023
More pressure on house prices likely this year
Halifax Mortgages director Kim Kinnaird also predicts that higher borrowing costs will weigh on prices this year.
Kinnaird says:
“Alongside a market-wide uptick in mortgage approvals, these latest figures may indicate a more steady environment. However, cost of living concerns remain real for many households, which will likely continue weigh on sentiment and activity.
Combined with the impact of higher interest rates gradually feeding through to those re-mortgaging their current fixed-rate deals, we should expect some further downward pressure on house prices over course of this year.”
House prices in the south of England under the greatest pressure
House prices in the south of England are under the greatest pressure at the moment, Halifax’s report shows.
The four regions of southern England have seen average house prices fall over the last year, with the South East registering the largest dip, of -0.6%, pulling average house prices down to £387,469.
Halifax says:
Typically, it’s these regions (including Greater London, Eastern England and the South West) where buyers face the most expensive average property prices, and therefore the biggest impact of higher borrowing costs.
In London, which has the costliest homes of anywhere in the country at an average of £538,409, annual house price growth slowed to -0.2%.
But other regions saw growth, led by the West Midlands which had the strongest annual growth of +3.1%
Northern Ireland (+2.7%, £186,846), Scotland (+2.2%, £201,489) and Wales (+1.0%, £216,559) have also seen average property prices increase year-on-year.
Introduction: Halifax shows annual house price growth fizzling out
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Annual house price inflation in the UK has slowed to its lowest in a decade, as the market stabilises after last autumn’s turmoil.
Lender Halifax has just reported that prices in April were 0.1% higher than a year ago – a slowdown on the 1.6% annual house price growth recorded in March.
That’s the weakest increase since December 2012, as this chart shows:
On a monthly basis, the average house price decreased by 0.3% in April, wiping out a little of the 0.8% rise reported in March.
This knocked the price of the average property down to £286,896, from £287,891 in March.
Average prices are still around £28,000 higher than two years ago, but are around £7,000 below their peak set last summer – before rising mortgage costs and the turmoil caused by the mini-budget.
House price movements over recent months have largely mirrored the short-term volatility seen in borrowing costs, says Kim Kinnaird, director of Halifax Mortgages, who explains:
The sharp fall in prices we saw at the end of last year after September’s ‘mini-budget’ preceded something of a rebound in the first quarter of this year as economic conditions improved.
The economy has proven to be resilient, with a robust labour market and consumer price inflation predicted to decelerate sharply in the coming months. Mortgage rates are now stabilising, and though they remain well above the average of recent years, this gives important certainty to would-be buyers.
While the housing market as a whole remains subdued, the number of properties for sale is also slowly increasing, as sellers adapt to market conditions.
Last week, rival lender Nationwide reported that the average house price rose by 0.5% in April after seven months of declines.
Halifax’s data comes two days before the Bank of England is expected to raise UK interest rates for the 12th time in a row, to 4.5%, as it battles inflation.
Higher interest payments are already hitting households, with an estimated 700,000 UK households missed or defaulted on a rent or mortgage payment last month, data from Which? shows.
Overall, an estimated 2 million households missed or defaulted on at least one mortgage, rent, loan, credit card or bill payment in April, according to the latest Which? monthly consumer insight tracker, based on an online poll of about 2,000 people.
More here.
The agenda
7am BST: Halifax house price index for April
11am BST: NFIB index of US small business optimism
3pm BST: IBD/TIPP index of US economic optimism
