UK property market seen as a safe haven for global investors

The UK’s property sector is emerging as a sanctuary for international investors and tenants, driven by economic turbulence and political unpredictability overseas.

According to an analysis by Knight Frank, a £1.5 million home in Dulwich is likely to find a buyer faster than a £7.5 million residence near Hyde Park, reflecting a cautious approach in pricier areas.

It says that recent tariff fluctuations have nudged mortgage rates downwards, with the Bank of England poised to trim rates by 0.25% next week to bolster the economy.

The five-year SONIA swap rate, a key indicator, dropped to 3.7% last Thursday, down from over 4% in late March before tariff news surfaced.

This shift, indirectly influenced by US policy changes, makes homeownership in Britain more affordable, particularly in needs-driven markets where relocations are tied to education or employment.

Strong prime rental market

Stuart Bailey, the head of London super-prime sales at Knight Frank, said: “The UK is playing the safety card, but more by default than design.

“We are seeing buyers from the Middle East who are looking to make mid- to long-term investments in London because it is secure.

“Price declines have happened, but they took 10 years because there are enough owners sitting on cash who are not forced to sell.”

He added: “A strong rental market strengthens the safety net that prevents overnight price crashes from happening.”

Prime markets are vulnerable

Higher-value markets, swayed by decisions in Westminster or Washington, remain vulnerable, Knight Frank says.

It reports a 7% rise in property exchanges below £5 million in the six months to March compared to the previous year, while deals above this threshold fell by 6%.

The government’s move to eliminate non-dom status this month has further dampened enthusiasm in upscale markets, sending a discouraging signal to affluent buyers.

Yet, global financial market unrest has overshadowed these concerns.

Prime central London prices are 18% below their mid-2015 peak, but prices are not expected to hit previous highs, the firm reports.