Property prices on Mallorca and the neighbouring islands are rising steadily and significantly more than in the rest of Spain: This is confirmed by figures published by the National Statistics Institute INE. According to these, the price increase of residential property on the Balearic Islands in the last quarter of 2021 compared to the previous quarter was 9.6 percent. This is far above the Spanish average of 6.4 per cent. The current figures are reminiscent of the values of the real estate bubble that burst with the economic crisis in 2008. In 2007, price increases were over 10 percent in each of the first three quarters.
The Balearic Minister for Mobility and Housing, Josep Marí, expressed his concern about the current development to the MZ sister newspaper “Diario de Mallorca” as follows: “These price increases are anything but positive because many people are disadvantaged by them. We are trying to counteract this.”
One problem on the Balearic Islands is the comparatively low proportion of new buildings, which is nowhere near satisfying the demand among locals and prospective foreign buyers. According to Marí, the low proportion of new construction projects is in the nature of an island: “We are limited both in terms of space and resources. And there is a social consensus that you have to protect areas that are still undeveloped.” In addition, according to the minister, there is strong pressure from the real estate sector on sellers to increase prices.
Foreign buyers are making up an increasingly large proportion of property purchases, especially in the high-priced segment, as figures from the Association of Registry Officers show. While in 2012, 520 purchase contracts with a value of more than 500,000 euros were concluded with foreign buyers on the Balearic Islands, last year there were 2,157.
EU citizens accounted for the largest share with 1,889 transactions. Among non-EU nations, the British were in the lead last year with 158 property purchases. According to the association, foreigners accounted for 38.9 per cent of buyers in the islands in 2021.
This has fuelled the debate on how to restrict such transactions. Last week, there had already been a discussion on the topic in the Balearic parliament at the request of the eco-party Més per Mallorca.
Now support came from an unexpected source. Natalia Bueno, chairwoman of the Association of Estate Agents, was open to a restriction. According to her, the high demand from abroad is a major factor for the price increases. Bueno stressed, however, that these are not evenly distributed among all municipalities on the island.
Luis Martín of the Association of Property Developers, on the other hand, is sceptical about the debate. Such a restriction is not compatible with EU law. According to Martín, one should concentrate much more on freeing up building land for social housing. In addition, the restrictions on the height of new buildings should be relaxed. According to the association president, the measures taken so far by the left-wing government “have not worked.”