Withdrawals from open-ended property funds tumbled last month to levels not seen since May 2019.

Just over £78m was withdrawn from property funds in January, down from £329m in December and £261m in November last year, according to global fund transaction network Calastone.

However, Calastone said the improvement in net outflows was not due to an uptick in purchasing, but a steep reduction in selling.

Buying activity fell further in January, to £137m – the lowest level since September 2016.

“The real and present danger of contagion across the whole property fund sector seems to have been contained, but it is not out of the woods yet,” said Edward Glyn, head of global markets at Calastone.

“From a cashflow perspective, sharply lower redemptions give fund managers valuable breathing space to rejig the portfolio and rebuild liquidity buffers, but a buyers’ strike leaves the sector vulnerable to any further negative news in the short term,” Glynn added.

Withdrawals from property funds spiked in the wake of M&G’s decision to suspend trading in the M&G Property Portfolio fund on 5 December after a wave of redemptions, with net outflows hitting £60m the day after.

Outflows began to ease following the Conservatives’ decisive victory in the general election.

M&G’s fund remains closed, as the investment manager pushes ahead with more than £242m of disposals.