Prices are rising in Mallorca's property market
The worldwide shortage of building materials, new construction and holiday properties, which has been going on for months, is driving up prices and, of course, the great demand that has continued since the travel warning was lifted at Easter. Property prices on Mallorca and the neighbouring islands are now back at the level they were before the financial crisis in 2008, according to the property price index of the Spanish statistics institute INE. According to the current publication with the figures for the 2nd quarter of 2021, statistically the price level of the 3rd quarter of 2007 has been reached again, when the real estate boom reached its peak.
The bubble burst one year later with the insolvency of the US bank Lehman Brothers and the outbreak of a worldwide financial crisis, which of course also affected Mallorca. One of the main reasons is definitely the new buildings, which have increased strongly on Mallorca and the other Balearic Islands in the last 2-3 years and are sold mainly to foreigners willing to pay.
Covid and the pandemic have had their effect
In view of zero interest rates and under the impression of the pandemic, this trend has intensified again since 2020, as many real estate agents report. Although not quite as pronounced, prices are also rising on the local market. In the meantime, a price level has been reached again that makes it almost impossible for younger people with normal incomes to buy a property. Prices are also being driven up by the international rise in the price of building materials. An end to this development is not yet in sight. After a slowdown in the first quarter, prices on Mallorca and the neighbouring islands rose again strongly in the second quarter by 5.7 per cent compared to the previous year. Behind the Canary Islands and ahead of Cantabria on the mainland, the Balearic Islands were among the three Spanish regions with the highest price increases.