Property fund outflows in December fell to their lowest level since August, according to the latest Fund Flow Index from global funds network Calastone.

Investors withdrew a net £35m from their property fund holdings, which was down from £53m in November and less than half the level in October amid Budget fears.

For the full year, property fund outflows fell to £745m from £1.16bn in 2024, marking the best result since 2020, when many funds were closed to redemptions.

Overall transaction volumes were lower in 2025, down 23% year on year. Net outflows narrowed because sell orders declined more sharply than buy orders: the value of sell orders fell 25% year on year, compared with a 19% decline in buy orders.

According to Edward Glyn, head of global markets at Calastone, reduced selling pressure was the primary cause of lower outflows in 2025, not higher appetite from buyers. This reflects a shift towards stabilisation rather than renewed demand.

He said: “Yet this must all be considered in the wider context, which shines a more positive light on property; 2025 marked the worst year on record for equity funds, with outflows more than double those seen in 2016 during the Brexit referendum.

“Most of this was due to frontrunning on Budget speculation, although it also reflected fears around the high level of equity markets. Lower-risk asset classes – mixed assets, money markets and fixed income – were all beneficiaries. In this context, lower outflows from property funds should be seen as reflecting this wider trend.”

For 2026, falling interest rates are supportive for property, but Calastone suggested that the key would be sustained economic growth, which, in the UK and much of Europe, is currently hard to find.