UK House Prices Experience Smallest Rise Since 2020, London Prices Fall
In the year leading up to June, UK house prices increased by 1.7%, marking the smallest rise since July 2020, according to data from the Office for National Statistics. This figure is a drop from the 1.8% increase recorded in May. The average UK house price in June was £288,000 ($367,000), which is £5,000 below the recent peak in November 2022.
London saw the lowest annual percentage change in England, with prices dropping by 0.6%. This decline in London’s housing market is concerning for homeowners and investors in the capital city.
Insurance stocks have emerged as leaders in the Stoxx 600 index, with both Direct Line and Admiral Group experiencing gains of 6.9% in early trade. These insurers have been buoyed by the sharp drop in UK inflation, which fell to 6.8% in July. Admiral also reported a marginal rise in pre-tax profit for the first half of the year, increasing by 4% compared to 2022.
Aviva, another insurance company, also posted gains with shares up 2.5% after announcing an 8% rise in first-half operating profit. The wider insurance sector saw a 0.5% increase, indicating overall optimism and growth in the industry.
Following the release of UK inflation data, the pound rose against the dollar. The data showed that UK inflation slowed to 6.8% in July. At 7:39 a.m. London time, the pound was up 0.2% against the greenback at $1.2729.
Fitch Ratings, a global credit rating agency, has issued a warning about possible downgrades to banks, including JPMorgan Chase. Fitch had already cut its rating on the industry back in June, and another downgrade would force the agency to reconsider the ratings of more than 70 banks it covers. Analyst Chris Wolfe emphasized that a downgrade would have consequences for the affected banks.
HSBC has identified nine “unloved stocks” listed on the London Stock Exchange that could potentially experience a surge. UK markets have started to outperform other global indices since the release of the UK’s June inflation data in July. The bank’s strategists noted that these nine stocks had strongly outperformed the broader FTSE 350 over the past two months, returning 9% compared to the benchmark’s 0.6% decline.
In the US markets, top Morningstar strategist Dave Sekera has advised investors to sell six overvalued stocks and buy five others. Despite a recent selloff, US markets are only trading at a small discount compared to the beginning of the year. Sekera expects returns to be more modest for the rest of the year.
European markets are expected to open lower on Wednesday, with Britain’s FTSE predicted to drop 12 points to 7,374, Germany’s DAX anticipated to decline 48 points to 15,715, France’s CAC projected to decrease 16 points to 7,248, and Italy’s FTSE MIB estimated to fall 91 points to 28,173.
Overall, the housing market in the UK is experiencing a slowdown with the smallest rise in house prices since 2020. However, insurance stocks are performing well due to a drop in UK inflation, and analysts are identifying potential opportunities for growth in both the UK and global markets.