SAVILLS: Get ready for a global property slowdown

A man bathes in an ice-hole in Lisi Lake, with the air temperature at about minus 6 degrees Celsius (21.2 degrees Fahrenheit), in Tbilisi February 9, 2012.

REUTERS/David Mdzinarishvili

The global property company Savills put out a trading update Monday, and while things are good right now, the company can see storm clouds on the horizon.

Savills, which carries out property services such as valuation, planning consultancy, and landlord and tenant services, had a "strong finish to the year."

The sale of a significant property in Berlin occurred earlier than expected and, as a result, Savills says 2015 results are set to be ahead of forecasts.

So far so good.

But the company ends the update with a warning (emphasis added):

In the light of heightened uncertainty over global economic prospects and rising interest rates, we expect a tempering of the strong transaction volumes of recent times in certain markets, notwithstanding that market fundamentals remain sound. Accordingly we retain our original expectations for 2016.

The global property market has been going through a boom over the past few years, with property prices jumping and with frenzied activity. Nowhere has that been more obvious than in Britain, where house prices have jumped above precrisis levels, buy-to-rent activity has gone through the roof, and skyscrapers have sprung up across London at a rate of knots.

But Savills thinks we're at the tail end of that boom.

China's ongoing stock market meltdown, which began in August, has revived fears about just how sustainable its growth and the growth of other emerging-market countries really is. That could have repercussions for global growth.

Then there's oil — the price of the black stuff continues to plummet, even as tensions among oil-producing nations flair (yet another geopolitical issue to consider).

On top of that, the era of easy money seems to be coming to an end with December's US interest-rate rise, the first in nine years. Central banks around the world are expected to follow suit.

All of this, Savills says, will make people less willing to invest and buy property.

But it's worth noting that Savills says "market fundamentals remain sound" — it's not predicting a price crash, just a slowdown in activity.

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