The global property market was flourishing in 2015 and while many real estate professionals are crossing their fingers that the international market will strike the same luck this year, the global property company Savills predicted that a slowdown is to be expected in 2016.
Last Monday, the company released a trading update noting that the global property market made a strong finish in 2015 due to significant property sales in Berlin which occurred earlier than expected. However, Savills ended the update in a sad note by giving a warning.
"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 company wrote.
Over the past few years, the global property market has enjoyed a boom, with property prices jumping and frenzied activity. For instance, in Britain, house prices significantly increased above pre-crisis levels, buy-to-rent activity has gone through the roof and new developments sprung up like mushrooms across London. Unfortunately, Savills pointed out that the global property market is currently at the tail end of that real estate boom.
In the global scene, major economic crises are happening that will contribute to the predicted slowdown. China, which has been suffering from a stock market meltdown since August, has not yet recovered and is even making other countries fear for their own stocks. There is also the case of the plummeting oil prices which is causing tension among oil-producing nations. On top of that, the US Federal Reserve increased their interest rates for the first time in 9 years. Major banks around the world are expected to follow suit. Savills foresaw that all of these economic issues will make buyers less willing to invest in property.
