By Chris Dorrell
Markets opened slightly lower on Wednesday after new house price figures from Halifax sent shares in housebuilders lower.
The capital’s premier index slipped 0.18 per cent to 7,614.70 points, while the domestically-focused mid-cap FTSE 250 index, which is more aligned with the health of the UK economy, dropped 0.20 per cent to 19,178.45 points.
Housebuilders were down after figures from Halifax showed a first annual fall in house prices for over a decade.
Persimmon was down 1.9 per cent, Berkeley Group 1.5 per cent and Barratt Developments 1.2 per cent.
Halifax said the average house price has fallen by one per cent of the past year despite a surge in sales in early spring. The market has been bruised by the Bank of England’s decision to hike interest rates to 4.5 per cent, which in turn led lenders to raise rates on mortgages.
Things are unlikely to get better fast. Over the past few weeks, mortgage rates have skyrocketed amid fears that interest rates will have to go higher than originally anticipated.
As Hargreaves Lansdown’s Susannah Streeter commented: “This fall won’t reflect the impact of the pulling of the cheapest deals from the market in recent weeks, and as monthly mortgage payments become increasingly unaffordable, prices are likely to have to fall further to lure would-be movers back into the market.”
Shares in energy giants Shell and BP slipped 1.0 per cent and 0.7 per cent respectively. Oil prices have slipped slightly over the past couple of days despite OPEC’s decision to sustain heavy output cuts.
Sluggish growth in China and the potential for recession across much of the US and Europe has offset Saudi Arabia’s latest cuts, keeping prices mostly stable. This has put off many investors, who expected that the production cut would fuel a surge in prices.
Associated British Foods topped the FTSE, rising 3.1 per cent. Its shares remained higher after it announced the acquisition of agritech and milk records-keeper for nearly £50m yesterday.
The post FTSE 100 live: Housebuilders drag index lower after house price fall data appeared first on CityAM.
