Rising house prices boost builders in London trading

The average home in the UK has become about £22,000 more expensive than it was a year ago, and the price rise has been passed on to the shares of companies that build the houses.

The average homeowner would be 9.5% better off if they sold today than 12 months ago, it was disclosed on Monday.

It was a result that added to the value of several construction companies, helping them push up the top share index in London.

Shareholders in Persimmon, one of the UK’s biggest housebuilders, were among those whose assets rose in value following the news.

Persimmon investors would be nearly 29% better off by selling their shares at Monday’s price than they would have been a year ago, while Barratt Developments shares have risen by nearly a third since then.

Together with some of London’s airlines, buoyed by a call for eased travel restrictions, the housebuilders helped set the mood for the day.

The FTSE 100 closed up 0.1%, or 8.18 points, ending the day at 7,077.22.

The index’s top performer was BT, after analysts at Jefferies said they think the company’s shares will be worth more than previously expected.

“(British Airways owner) IAG also got an afternoon lift on a report that US and UK airlines had issued a joint plea for a resumption of transatlantic travel between the two countries, led by the CEOs of Delta, United and American Airlines, who argued that the scope was there, for the vaccination progress on both sides of the Atlantic should allow a relaxation of the restrictions,” said CMC Markets analyst Michael Hewson.

Miners cramped the bottom of the index, with Anglo American closing down more than 3%, the FTSE’s worst performer on Monday.

The company had jettisoned its South African thermal coal business onto the Johannesburg Stock Exchange on Monday, but faced an attack from a short seller the day before.

Boatman Capital argued that the clean-up cost of the spun-off Thungela’s coal mines might be so high that the business itself is not worth anything.

Thungela’s shares also dropped heavily on Monday after it started to trade.

In currency the pound was flat, buying 1.1623 euros, and rose less than 0.1% against the dollar to 1.4176.

“Currency markets are experiencing what can only be described as the market equivalent of watching paint dry, with the US dollar slightly weaker on the day, with the likes of the Norwegian kroner outperforming,” Mr Hewson said.

US markets were trading down as trading in Europe closed. The S&P 500 had lost 0.3%, while the Dow Jones was slightly worse at 0.4%.

Germany’s Dax fell 0.1% while the Cac in France rose 0.4%.

It was a mixed bag of news for London’s listed companies.

Sir Martin Sorrell’s advertising agency, S4 Capital, raised its profit forecast, which sent shares up 5.9%.

Clipper Logistics also lifted its trading forecasts, helping to boost shares by 0.8%.

Meanwhile, shares in office group IWG fell more than 10% when it warned of the opposite. It now expects profit to be well below where they were in 2020 as Covid continues to weigh.

Ocado lost a battle in the High Court over one of its distribution centres, for which Islington Council had revoked permission due to pollution fears. Shares closed down 0.4%.

And rival supermarket Tesco’s shares ended flat after it announced an end to a partnership with France’s Carrefour.

The biggest risers on the FTSE 100 were BT, up 6.5p to 183.5p, IAG, up 5.46p to 201.8p, Persimmon, up 85p to 3236p, Rolls-Royce, up 2.8p to 110.12p, and Informa, up 12.4p to 553p.

The biggest fallers on the FTSE 100 were Anglo American, down 101.5p to 3153p, Antofagasta, down 43p to 1522.5p, B&M, down 13.8p to 525.6p, Polymetal, down 34p to 1668.5p, and Glencore, down 6.05p to 323.7p.