UK property fund outflows slowed to £15m in May, the lowest monthly level since June 2024, according to the latest Fund Flow Index from Calastone.

The ease was driven mainly by sharply reduced sell orders, with buying activity also down, but to a level consistent with the long-term trend.

Calastone said slowing outflows point to improving sentiment towards property after a prolonged period of pressure driven by higher interest rates and uncertainty over valuations.

Edward Glyn, head of global markets at Calastone said: “Outflows from property funds have been on an improving trend since September. May’s data suggests investors may be becoming more comfortable with property’s place in a higher-rate environment.

“While the sector is still seeing outflows, the pace of withdrawals has slowed materially, which is an encouraging sign after a sustained period of weakness.”

This fits with the broader pattern Calastone saw with fund flows during May where investors moved decisively into bonds and mixed-asset funds, seeking income and diversification, while reducing holdings in cash and trimming equity exposure.

Glyn added: “Property sits naturally within this pattern. As investors look for assets that can deliver yield alongside longer-term capital potential, some of the pressure on the sector appears to be easing.”

Meanwhile, the index also found UK investors drove near-record demand for mixed asset funds in May and the strongest fixed income inflows in three years.

Investors moved money out of money market funds while also trimming equity exposure, reallocating towards income-producing and diversified assets during the month.