London pre-open: Stocks set to rise; Halifax house prices in focus

(Sharecast News) - London stocks were set for a firmer open on Wednesday following an upbeat session on Wall Street, as investors mulled the latest Halifax house price data and a big M&A deal in the housebuilding sector. The FTSE 100 was called to open 17 points higher at 7,698.

Figures released earlier by Halifax showed that house prices rose in January for the fourth month in a row, as mortgage rates fell.

House prices were up 1.3% on the month following a 1.1% increase in December 2023.

On the year, prices rose 2.5% in January following a 1.8% jump the month before. This marked the highest annual growth since January 2023.

The average UK home now costs £291,029, up from 287,244.

Kim Kinnaird, director, Halifax mortgages, said: "The recent reduction of mortgage rates from lenders as competition picks up, alongside fading inflationary pressures and a still-resilient labour market has contributed to increased confidence among buyers and sellers. This has resulted in a positive start to 2024's housing market.

"However, while housing activity has increased over recent months, interest rates remain elevated compared to the historic lows seen in recent years and demand continues to exceed supply. For those looking to buy a first home, the average deposit raised is now £53,414, around 19% of the purchase price. It's not surprising that almost two thirds (63%) of new buyers getting a foot on the ladder are now buying in joint names.

"Looking ahead, affordability challenges are likely to remain and further modest falls should not be ruled out, against a backdrop of broader uncertainty in the economic environment."

In corporate news, housebuilders Barratt Developments and Redrow said they had agreed an all-share merger valuing the latter at £2.5bn.

Under the terms of the deal, Redrow investors will receive 1.44 new Barratt shares for their own stock which would leave them with 32.8% of the combined group and Barratt shareholders with the remainder.

The terms also imply a premium of 27.2% to the closing price per Redrow share of 600p on February 6.

Woodside Energy, the Australian oil and gas group with secondary listings in London and New York, said it has called off merger talks with Santos that would have created an energy giant worth $52bn.

The companies confirmed in December that they were in talks around a potential tie-up, but have now said they have "ceased discussions".

In a statement, Woodside chief executive Meg O'Neill said: "While the discussions with Santos did not result in a transaction, Woodside considers that the global LNG sector provides significant potential for value creation."