Has British prime real estate regained its status as a secure investment option?
Amidst economic turmoil caused by Trump's tariffs and stock market volatility, cautious investors have turned to safe haven assets like gold and property. While gold has hit a record high, property may also be gaining ground as a haven. According to Knight Frank's analysis, Trump's trade policy could boost the property market, owing to falling swap rates that push down mortgage pricing.
Prime London property, which has faced challenges due to Brexit and higher taxes in recent years, could see an uptick in international demand, making it an appealing place to safeguard wealth. American buyers, seeking to exit the US, are reportedly drawn to the UK's property market, particularly London, because of the shared language and its familiar feel.
The daily SONIA swap rate has dropped from over 4% at the end of March to 3.7% last Thursday, a trend that could make purchasing property in the UK slightly cheaper for overseas buyers, according to Knight Frank. In the first quarter of 2025, the United States accounted for 6.9% of all prime central London buyers, according to Knight Frank data, indicating a robust demand.
International investors view London prime property as affordable compared to previous years, particularly given the weakness of the pound against the dollar. Moreover, compared to the eurozone's economic woes and political instability in other parts of the world, the UK appears relatively stable.
While stock markets have been volatile recently, causing sell-offs in both the FTSE 100 and S&P 500, the primary concern for many investors remains the unpredictability of Trump's tariffs. The gold price has also surged, though it's a challenge to generate an income from gold and there's uncertainty about its peak.
According to HMRC research released this month, 'safety' was cited as a primary reason for overseas buyers to invest in UK property. However, as with any safe haven, it's essential to remember that there's no guarantee that property prices or gold will maintain their value in the long term. Investors are advised to consult their financial plans before making any decisions.
- Cautious investors, seeking to safeguard their wealth amidst economic turmoil caused by Trump's tariffs and stock market volatility, are increasingly considering investing in both gold and property, with prime London property appearing particularly appealing due to its affordability and relative stability compared to previous years.
- With the daily SONIA swap rate dropping and making purchasing property in the UK slightly cheaper for overseas buyers, London's prime property market could experience an uptick in international demand, especially from American buyers seeking to exit the US market.
- While gold has hit a record high and property may also be gaining ground as safe haven assets, investors must remember that investing in these areas comes with risks, as there's no guarantee that property prices or gold will maintain their value in the long term. It's crucial for investors to consult their financial plans before making any decisions.
