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FTSE 100 Live: Home Prices Fall as Interest Rates Rise, Focus on US Jobs Report

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House price drops 0.1% in July

The latest housing market report from mortgage lender Halifax shows that prices fell last month for the first time since June 2021, falling marginally by 0.1%. The annual growth rate slowed to 11.8% from 12.5%.

Halifax CEO Russell Galley said: “While we shouldn’t read too much in a single month, especially as the decline is only fractional, a slowdown in annual house price growth has been expected for some time.

“Leading housing market indicators have recently shown a slowdown in activity, while rising borrowing costs are putting pressure on household budgets amid exceptionally high house price-to-income ratios.”

However, he added that some of the driving forces behind the vibrant market in recent years, such as additional funds saved during the pandemic and demand for investment, are still apparent.

Galley said: “The extremely short supply of homes for sale is also a major long-term challenge, but serves to support high property prices.

“Looking ahead, housing prices are likely to come under more pressure as those market winds wane further and the headwinds of rising interest rates and higher cost of living take hold.”

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FTSE 100 stable, US jobs report in focus

Financial markets have held up despite the Bank of England’s recession warning and the largest rate hike in 27 years.

The domestically focused FTSE 250 improved 0.7% yesterday and the FTSE 100 index was close to its opening mark, in line with robust performance elsewhere in Europe.

CMC Markets is seeing a resilient start after forecasting a 10-point rise for the FTSE 100 to 7458, although progress later in the session is likely to depend on the outcome of the closely-watched US nonfarm payrolls report.

Wall Street economists expect 250,000 jobs to be added, compared to the better-than-predicted figure of 372,000 last month.

Labor market strength is likely to be the primary consideration for the US Federal Reserve in determining the pace of interest rate hikes in the fight against inflation.

US markets were slightly lower yesterday, but the S&P 500 remains on track to finish higher for the third week in a row.

The pound, meanwhile, was just above $1.21 against the US dollar. Brent oil, which is down about 10% this week, has stabilized at nearly $94.50 a barrel.

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