International buyers and tenants are turning to the UK property market as a “safe haven” following the chaos caused by Trump tariffs, says Knight Frank.
Sharp falls across global markets caused by the uncertain direction of US trade policy has boosted trusted asset classes such as UK real estate.
Knight Frank head of UK residential research Tom Bill says: “In simple terms, [US President] Donald Trump has made buying a house in the UK slightly cheaper.”
“The tariff turbulence of recent weeks has put downwards pressure on mortgage rates as the Bank of England is expected to cut more proactively to support the UK economy, starting with a 0.25% reduction next week.”
Bill adds: “The five-year Sonia swap rate closed trading at 3.7% last Thursday, which compared to a figure of more than 4% at the end of March before the first tariff announcement.”
The US administration laid out the full extent of its tariff programme, affecting more than 70 countries on 2 April, which it called ‘Liberation Day’.
The number of UK exchanges below £5m increased by 7% in the six months to March compared to a year ago, says Knight Frank, adding that more detailed property data in this area is still being collected.
Bill says: “Higher-value markets, where buyers are more discretionary, are more exposed to decisions taken in the White House or on Downing Street.”
The property firm says its agents have seen “a shift in the mood” among international buyers looking for safe assets following the “commotion on global financial markets this month”.
Knight Frank head of London super-prime sales Stuart Bailey says: “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.”
Bailey adds that a “strong rental market” in the UK is also a strong pull for foreign investors.
The agency points out: “Average prices in prime central London are 18% lower than the last peak in mid-2015.
“Combined with the relative weakness of the pound since then, that will look like particularly good value for some.”
The firm highlights comments from Quantmetriks chief economist Savvas Savouri who says that at an institutional level, growing sovereign wealth from countries including Canada, Australia, Norway, Singapore and Qatar will continue to flow into UK commercial and residential property “because their own domestic markets are too small”.
He says the UK has an appeal to investors despite the recent toughening up of its non-dom tax regime at the end of the previous Conservative government and under the current Labour administration.
Savouri adds: “The UK remains attractive, political warts and all.”