While the chancellor was in Davos last week promoting the UK as a magnet for global investors, the property market tells a different story, according to Tom Bill, head of UK residential research at Knight Frank.
Buyers and sellers are still digesting the fallout from Labour’s first two Budgets, leaving confidence shaky and transactions sluggish.
Rachel Reeves claimed Britain is “a haven of stability in an uncertain world,” but Bill says data suggest that many property market participants are approaching 2026 cautiously, weighing policy shifts, rising costs, and economic uncertainty before making major moves.
The contrast between high-level promises and the market’s hesitancy highlights a key question: can the UK truly live up to its safe-haven status for investors, or is the property market bracing for a reality check?
Bill said: “Emotions have been running high in the early weeks of 2026 after the US intervened militarily in Venezuela and warned it may do the same in Greenland. It threatened eight countries with trade tariffs unless it could bring the Arctic nation under its control. A framework deal between the US and NATO appears to have avoided such an outcome and the whole exercise felt like the latest chapter in Donald Trump’s ‘escalate to de-escalate’ playbook.
“Or, depending on where you sit politically, perhaps it was the latest example of a TACO (Trump Always Chickens Out) moment?
“Either way, the tariffs Trump was threatening to levy would have hurt the UK economy and, ultimately, buyer sentiment.”
Bill points to the fact that the Greenland drama followed sustained civil unrest in Iran earlier this year and a jump in global borrowing costs last week ahead of a snap election in Japan, where the favourite to win may undermine the country’s fiscal stability by lowering taxes and raising spending.
He explained: “UK swap rates, which lenders use to price fixed-rate mortgages, edged higher although financial markets were still largely pricing in two Bank of England cuts this year.
“All this geopolitical volatility means the stage feels particularly well set to attract wealthy investors to the UK, but whether they come is another matter.
“Following the abolition of non dom status and the ringfence around worldwide assets in late 2024, some left for countries including Italy, Dubai and Switzerland, weakening demand for prime UK property.
“The direction of travel contrasts with the period following the 2008 global financial crisis, when buyers from around the world were drawn to the safety of bricks and mortar in prime central London.
“Not that the capital has entirely lost its sheen, as explained by Berkeley executive chairman Rob Perrins on the latest episode of the Housing Unpacked podcast. It’s also worth noting that not everyone leaving the UK is selling their property. Some may return in future while others are keeping their options open by renting.”
The property market’s performance has certainly been better than the period following Labour’s first Budget in October 2024, when non dom status was formally scrapped.
The number of £5m-plus exchanges in the UK was 36% higher in Q4 2025 than the same period in 2024, Knight Frank data shows. However, for context, the figure was 14% below the five-year average.
“For the market to recover and momentum to build, it is clear the UK requires concrete incentives to match the optimistic tone set in the Alpine ski resort last week,” Bill added.
