UK house prices rise again in March; Tui says Easter and summer bookings strong – as it happened

European stock markets have notched up modest gains today. The FTSE 100 index is 57 points ahead at 7,720, a 0.75% gain. The German, French and Italian incides have gained between 0.3% and 0.9%.

UK house prices rose unexpectedly for a third month in a row in March in a sign of “resilience” in the market according to the latest report from Halifax.

The lender said the average price rose by 0.8% month on month, to £287,880, which followed rises of 0.2% and 1.2% in January and February. The increase defied economists’ expectations of a 0.3% fall.

Over the past 12 months house price growth has eased to 1.6%, its slowest rate since October 2019, Halifax said on Thursday, but prices rose in every region of the UK during March.

Economists have been waiting to see the extent of the slowdown in the British housing market amid high inflation and rising interest rates by central banks in response.

And here is our full story on Sainsbury’s:

Sainsbury’s has defended itself against criticism of new plastic packaging for mince which shoppers have criticised as “very medical”, “too compressed” and “vile”.

We are closing up for today. Thank you for reading. Have a wonderful Easter weekend! We’ll be back on Tuesday, as the UK and European markets are closed on Good Friday and Easter Monday – JK

There was some good news from Germany this morning, where factory output rose 2% in February, following 3.7% growth in January.

Economists said this suggests that Europe’s biggest economy can avoid a technical recession (defined as two or more consecutive quarters of contraction), although it doesn’t mean that it’s out of the woods yet.

Carsten Brzeski, global head of macro at ING, said:

German industry seems to have woken up from hibernation and has by now more than made up for the sharp plunge in December. The strong rebound seems to be driven by the reopening of China, strong activity in the automotive sector and a more general ongoing reduction of backlogs. Despite the strong rebound, however, industrial production is still slightly below its pre-pandemic level.

Yesterday, leading German economic research institutes slightly revised upward their growth forecasts for 2023 to 0.3%, from -0.4%. While this created a collective sigh of relief in German media, we remain more cautious. Admittedly, this week’s strong industrial data take away the risk of a technical recession.

However, despite the recent surge in new orders, the inventory build-up as well as the expected slowdown of the US economy argue against too much industrial optimism. It would not be the first time that the German (and the European) economy starts the year on a positive note, just to lose momentum over the course of the year. Finally, don’t forget that the recent financial turmoil and broader impact of the most aggressive monetary policy tightening in decades will weigh on economic activity.

The world needs to close coal power plants at almost five times the present rate, as well as stop building new ones, in order to meet the goals of the Paris climate agreement, according to a report.

Global Energy Monitor, a San Francisco-based NGO, said insufficient progress was being made to avoid “climate chaos” and that plans for a sharp increase in the number of coal-fired plants in China would require even steeper cuts to the rest of the global fleet to meet the world’s climate goals.

In order to meet the Paris climate agreement, all coal-fired plants need to be closed by 2040 and no new ones can come online.

Developed economies are expected to shut their plants a decade earlier than the global phaseout. This will require countries in the Organisation for Economic Co-operation and Development to close 60 gigawatts of coal-power capacityeach year until 2030 – about four-and-a-half times the amount recorded last year. Non-OECD countries will need to close 91GW of coal power capacity every year until 2040.

Bosses at the brewer Adnams have had discussions about potentially leaving the Confederation of British Industry after a Guardian investigation revealed multiple allegations of sexual misconduct by the influential business lobby group’s staff.

Andy Wood, Adnams’s chief executive, on Thursday said management at the Suffolk-based brewer had talked about leaving the organisation, depending on the outcome of an independent investigation.

The CBI is facing a crisis after the Guardian reported allegations from more than a dozen women who said they had been victims of various forms of sexual misconduct by senior figures at the organisation. One woman alleged that she was raped at a staff party on a boat in 2019.

The picture is worse in the eurozone, where construction activity fell at the sharpest rate for three months in March, led by Germany.

The S&P Global eurozone construction PMI fell to 45.0 from 47.6 in February, signalling a faster contraction.

Usamah Bhatti, economist at S&P Global Market Intelligence, said:

The eurozone’s construction sector fell deeper into contraction territory at the end of the first quarter of 2023. There were steep and strengthened reductions in both activity and new order volumes during March that were the fastest seen in the year-to-date.

On a more positive note, firms commented on the softening impact higher prices, as cost burdens rose at the slowest pace since December 2020. This in part was the result of easing pressure on construction supply chains, as the average time taken for inputs to be delivered lengthened to the smallest degree since October 2019, with German firms recording a shortening of delivery times for the first time since September 2014.

Overall, business sentiment among eurozone constructors remained deeply pessimistic in the latest survey period amid concerns surrounding demand weakness the ongoing cost of living crisis.

Oliver Rakau, chief Germany economist at Oxford Economics, tweeted:

Construction growth in the UK slowed in March, as house building weakened, according to a survey.

Lower volumes of residential building work have now been recorded for four months in a row, the construction PMI from S&P Global/CIPS shows. The main index fell to 50.7 in March from 54.6 in February, signalling a slowdown in growth. Any reading above 50 signals expansion; any reading below points to a decline.

Supply conditions improved in March, reflecting greater availability of construction products and materials, alongside fewer logistics bottlenecks. The overall improvement in vendor performance was the strongest since November 2009.

Tim Moore, economics director at S&P Global Market Intelligence, which compiles the survey, said:

UK construction companies experienced a sustained rebound in output levels during March as work on civil engineering and commercial projects picked up for the second month running. Improved tender opportunities were also reflected in an upturn in new orders since February and the strongest rate of job creation for five months.

A sharp and accelerated decline in house building was the main area of concern in March. Cutbacks to new residential projects in the wake of subdued demand and rising interest rates contributed to the sharpest fall in housing activity across the construction sector for almost three years.

Despite worries about the near-term outlook for housing activity, expectations for total construction output during the year ahead were relatively upbeat in March. Growth projections were boosted by the fastest improvement in suppliers’ delivery times for more than a decade. Survey respondents often cited improved availability of construction inputs and subsequent hopes that purchasing price inflation would moderate in the months ahead.

Sainsbury’s has defended its new vacuum packaging for minced beef, despite complaints from customers that it turns the meat to mush.

The supermarket said the new vacuum pack uses 55% less plastic than the traditional plastic tray covered with film, saving 450 tonnes of plastic each year “without impacting taste or quality”.

It issued leaflets in its stores to explain the new packaging to customers.

Sainsbury’s announced last month that it was “the first UK retailer to vacuum pack all beef mince saving 450 tonnes of plastic each year”. However, shoppers are not impressed.

One tweeted:

Another said:

People booked on cross-Channel ferries from the port of Dover are facing delays at the start of the Easter getaway.

Queues for passport checks by French officials at the Kent port are “up to 60 minutes”, the ferry operator DFDS wrote on Twitter.

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Holidaymakers bound for Portugal over Easter face delays on entering the country as Portuguese immigration officials go on strike.

The Portuguese news agency Lusa reported that the five days of industrial action, starting today, “could cause disturbances at airports”.

The Foreign, Commonwealth and Development Office says on its website:

Between 6-10 April there may be travel disruption due to Industrial action by Portuguese immigration officers. If you are travelling over this period, allow additional time to clear border control when entering and exiting Portugal.

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The strikes come at a time of booming travel bookings.

Tui, one of the world’s biggest tourism groups, has just said it is seeing strong demand for sunshine destinations over the Easter holidays: the Canary Islands, Turkey, Balearics, mainland Spain, Egypt and Greece.

More than half a million people are going on holiday with Tui over Easter and its load factor is expected to be around 95% – in line with pre-Covid levels.

Customers continue to book at shorter notice and prefer package holidays and all-inclusive offers.

The company’s share price jumped 8%.

Tui’s chief executive, Sebastian Ebel, said:

Booking momentum remains encouraging, and the travel trends and strong demand for the Easter holidays are a healthy signal for the upcoming summer. Our products and strong brand are popular and in high demand – in the UK, Germany, the Netherlands, Belgium, Switzerland and many other markets where people are looking for relaxation in the sun and active experiences.

Based on trends to date and as we have said in March, we continue to anticipate capacity to be close to pre-pandemic levels. We expect a good summer.

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There have been warnings of flight cancellations and delays across Europe over the Easter holidays because of widespread strikes.

Strikes in France, Portugal, the UK and Germany could cause air travel disruption in parts of Europe, officials at airlines, airports and air traffic authorities have warned.

Steven Moore, who heads up air traffic management operations at Eurocontrol (the European Organisation for the Safety of Air Navigation), told Reuters:

There will be delays. There’s no doubt about it.

It is is major test of the aviation industry’s ability to prevent a repeat of last year’s summer holiday chaos, which was caused by staff shortages.

EasyJet’s chief executive, Johan Lundgren, said about the strikes:

It’s something that we have to plan for and we’re doing our best to try to mitigate that. But it’s of course very difficult because… sometimes you get only 24 hours’ notice.

France’s strikes alone (of air traffic controllers and others) have caused thousands of hours of delays so far, based on data from Eurocontrol.

Ryanair’s boss, Michael O’Leary, has been very vocal, complaining that those strikes disrupt the ability of airlines to cross through French airspace.

At Frankfurt airport, more than 300,000 passengers have been unable to fly in recent weeks because of industrial action in various industries. The head of the airport, Stefan Schulte, told Reuters:

For us this has meant a significant million-euro amount in terms of lost revenue.

We have to ask ourselves whether it would not be better to have a coordinated truce for critical infrastructure. To not have different strikes at different times, which always affect the overall system so strongly.

In Portugal, border control officers are set to strike this week as well as train workers.

Also on the property front… King Charles and the late Queen Elizabeth II have received payments equivalent to more than £1bn from two land and property estates that are at the centre of a centuries-old debate over whether their profits should be given to the public instead.

An investigation by the Guardian has established the full scale of income extracted by the royals from the duchies of Lancaster and Cornwall, which run giant portfolios of land and property across England.

The duchies operate as professionally run real estate empires that manage swathes of farmland, hotels, medieval castles, offices, shops and some of London’s prime luxury real estate. They also have substantial investment portfolios, but pay no corporation tax or capital gains tax.

Duchy accounts, held in parliamentary and state archives, reveal that the queen and her first-born son, in his capacity as the Duke of Cornwall, benefited from a huge increase in their revenues from the duchies during her seven-decade reign.

Last year, their duchy income totalled £41.8m. Adjusting for inflation, the pair have received the equivalent of more than £1.2bn in total revenues from the two estates.

Profits from the Duchy of Lancaster, which consists of 18,481 hectares of rural land, primarily in the north of England and the Midlands, automatically pass to whoever is sitting on the throne. The estate itself is valued at £652m.

How much money will the coronation of King Charles III cost the British public? What tax rate will our new king pay on his private income? How many engagements did “working royals” such as the Dukes of Gloucester and Kent attend over the last five years? How much were they paid? How much rent do Princesses Beatrice and Eugenie, who are not working royals, pay for residences in royal palaces?

Here’s our full story on UK house prices rising unexpectedly for the third month in a row in March:

Housing analyst Anthony Codling, who runs the property website Twindig, said:

The Halifax reported today that house prices rose for the third month in a row, therefore according to the Halifax, house prices have risen every month so far in 2023. This is not the story of a house price crash, but rather one where house prices are falling upwards.

In our view, three main factors have led to this positive pricing trend:
• The mini-budget spike in mortgage rates has been reversed
• In a more stable financial market mortgage lenders are more willing to lend
• Wage increases are allowing homebuyers to secure larger mortgages.

European bourses have made some modest gains, while many Asian stock markets slid, as a slowdown in the US services sector raised recession fears. Japan’s Nikkei lost 1.2% while Hong Kong’s Hang Seng edged up 0.1%.

The FTSE 100 index in London has gained 40 points to 7,702 in early trading, a 0.5% rise. Germany’s Dax and France’s CAC have added nearly 0.2% while Italy’s FTSE MiB is 0.7% ahead.

The pound is trading higher against both the dollar and the euro, at $1.2477 and €1.1435 respectively, up about 0.1%.

Oil prices are in the red, with Brent crude losing 28 cents to $84.71 a barrel and US light crude falling to $80.30 a barrel.

In China, the services purchasing managers’ index (PMI) climbed 2.8 points to 57.8 in March, the highest since June 2020. The composite survey showed improved overall new orders and operating conditions following the removal of Beijing’s zero-Covid policy. The new export orders measure hit its highest reading on record, after the lifting of restrictions on inbound visitors.

Cost pressures are picking up, as higher wages and raw materials drove up input costs for services firms, while selling prices only inched up. Competitive pressures are prompting firms to hold back from price hikes, said Duncan Wrigley, chief China+ economist at Pantheon Macroeconomics.

Consumer services led China’s reopening rebound, as elsewhere in the world. But now the services rebound is broadening out. Business activity readings in the official PMI were over 60 for retail, rail, road and air transport, internet services, financial services and leasing and business services.

China’s recovery is gaining momentum, though still uneven.

The Caixin manufacturing PMI fell to 50.0 in March, below the official manufacturing index at 51.9. Any reading below 50 indicates contraction; any reading above points to expansion.

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Wrigley explained:

The Caixin index is weighted towards exporters, light industry and the private sector. Export manufacturing is likely to remain weak, given soft global demand. As a result some of China’s roughly 300 million migrant workers will be forced to take lower-paid service sector jobs, instead of working in, say, an electronics plant.

The main demand drivers for current industrial are infrastructure and manufacturing investment, thanks to local governments front loading fundraising in the early part of this year. This is likely to drive heavy industry, such as iron and steel and other materials sectors. By contrast, light industry is more exposed to weak exports.

The property sector is showing recent signs of life…

Policymakers will view the March PMIs as indicating that China’s recovery is gradually gaining momentum, despite weaknesses in certain sectors, like exports and smaller manufacturers. Therefore, they are likely to maintain a wait-and-see approach, before considering a significant policy shift. They will be poised to add further growth support measures later in the year, if the domestic demand recovery flags.

With the exception of Greater London and the North East, all areas of the country experienced a slowdown in the rate of annual house price inflation last month, the Halifax data shows.

Northern Ireland continues to report the strongest annual growth in house prices of 4.9% (average house price of £186,459), followed by the West Midlands (3.8%, average price of £248,308).

In Wales, the rate of annual property price inflation has slowed to 1.0% (average property price of £213,959). Similarly in Scotland, the annual rate of growth fell to 2.3% (average price of £199,853).

Average house prices in London are up very slightly on this time last year (+0.1%) with the typical property now costing £537,250.

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Tom Bill, head of UK residential research at the property group Knight Frank, said:

Activity has been solid but unspectacular in the UK housing market this year as the hangover from the mini-budget slowly fades. Prices are broadly in a holding pattern but will be tested this spring as supply rises and higher mortgage rates cause a sharp intake of breath among a growing number of buyers and homeowners.

We expect prices to fall by a few percent this year as the transition to the new normal for borrowing costs takes place.

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

House prices across the UK rose for the third month in a row in March, while the annual rate slowed to the lowest in three and a half years.

This suggests that the market is stable, although a further slowdown throughout this year looks likely as mortgage costs have risen, said Halifax, which is part of Lloyds Banking Group.

A typical UK property now costs £287,880 (compared to £285,660 in February), according to the monthly house price index from Halifax.

Prices rose 0.8% in March from the month before following February’s 1.2% gain, and were up 1.6% on a year earlier, the slowest annual pace since October 2019.

House prices rose in all UK nations and regions last month, though the annual rate of growth continued to slow in most areas. Mortgage costs have risen as the Bank of England has raised interest rates 11 times to 4.25% to fight double-digit inflation (at 10.4% in February).

Kim Kinnaird, director of Halifax Mortgages, said:

The UK housing market continues to show resilience following the sharp downturn at the end of 2022, with average property prices rising again in March.

Predicting exactly where house prices go next is more difficult. While the increased cost of living continues to put significant pressure on personal finances, the likely drop in energy prices – and inflation more generally – in the coming months should offer a little more headroom in household budgets.

While the path for interest rates is uncertain, mortgage costs are unlikely to get significantly cheaper in the short-term and the performance of the housing market will continue to reflect these new norms of higher borrowing costs and lower demand. Therefore, we still expect to see a continued slowdown through this year.

The Halifax data has painted a more stable picture, while Nationwide Building Society’s house price index showed an 0.8% monthly drop in house prices, and an annual decline of 3.1%, the fastest since the aftermath of the financial crisis in 2009.

But other indicators, such as the Bank of England’s mortgage approvals data and property website Rightmove’s measure of asking prices have pointed to more stability in the housing market, after the Liz Truss government’s unfunded mini-budget caused chaos in the autumn.

UK housing market analyst Neal Hudson tweeted:

Matthew Thompson, head of sales at the estate agents Chestertons, said:

House hunters may not be seeing the drop in London property prices that they had hoped for. In March, the average price at which properties sold via our branches stood at £1.37m with neighbourhoods such as Putney, Fulham and Barnes being in particularly high demand with buyers.

Since the start of this year, many homeowners put their sale on hold to observe the market which has led to demand further exceeding the number of properties available for sale. This is resulting in properties keeping their value with little room for price negotiation. Throughout March, the majority of London sellers have therefore been able to secure their asking price or even receive higher offers from buyers.

The Agenda

• 8.30am BST: Eurozone S&P Global Construction PMI for March

• 9.30am BST: UK S&P Global/CIPS Construction PMI for March (forecast: 53.5)

• 1.30pm BST: US Initial jobless claims for week of 1 April (forecast: 200,000)