Housing in the Balearic Islands is becoming more expensive at rates similar to those of the years of the ‘real estate bubble‘. Values increased last year by 9.6%, the highest rate in Spain, with the aggravating factor that it is precisely the second-hand properties, the most sold at present, which have registered the most accentuated rise in value, according to data provided by the National Statistics Institute (INE).
The first fact to take into account is that this increase of 9.6% is not only the highest in the country, but there is no other autonomous community that comes close to these levels. Suffice it to say that Andalusia is in second place, with 8%, and the Canary Islands in third place, with 7.8%, two other areas with high tourist activity, while the Spanish average was 6.4%.
To assess this figure, it should be noted that it is the highest rise in housing prices on the islands, along with 9.8% in 2017, since the years of the real estate boom that resulted in the 2008 crisis.
Housing plan of 34.6 million for Balearic Islands
The Balearic Islands will receive 34,632,000 euros for subsidies under the 2022-2025 State Plan for access to housing. This was approved last week by the Sectoral Housing Conference, which ratified the distribution of 1,443 million for the subsidies of the 2022-2025 State Plan for access to housing, with a total of 1,843 million euros. The figures had been previously agreed on February 2nd and were ratified by the Council of Ministers on March 1st, as the Ministry of Transport, Mobility and Urban Agenda (Mitma) noted in a statement.
At the meeting, the Mitma minister, Raquel Sánchez, told the representatives of the autonomous communities and Ceuta and Melilla that housing is one of the central pillars of her portfolio. For their part, the recipients of the funds have committed to implement them as soon as possible.
There is another element to highlight in the INE report, and that is that the most notable increase in price is being recorded in second-hand housing, which is precisely what is being bought the most at the moment due to the scarcity of new construction. In the case of second-hand properties, the increase in value is 9.9%, again the highest in the whole country, where the average is 6.4%.
In the case of newly built residences, the price increase in the archipelago stands at 7%, and in this case there are autonomous regions where this rate has been higher, such as Andalusia and Aragon, both with 7.6%; Murcia, with 7.3%; and the Valencian Community and the Canary Islands, both with a rise of 7.1%.
If we compare the prices of 2021 with those of 2015, over that period new housing has risen on the islands by 60.7% and used housing by 48.9%, and in neither of these two cases is there any other autonomous region that exceeds the Balearic Islands.
Balearic second-hand housing has risen by 9.9% during 2021 and new housing has seen its price rise by 7%
For its part, the Govern attributes this rise in prices to the “shortage of land and high demand” in the Balearic Islands, in addition to the “pressure of the real estate market, which causes owners to raise prices”.
The Councilor for Mobility and Housing, Josep MarÃ, acknowledged that “the rise in prices is not a positive thing because it affects many people, and this is what we are trying to combat”.
Marà recalled that the council is working “in some way” to regulate pricing “with offers of public flats, with the Housing Act or by identifying pockets of empty flats owned by large developers for temporary occupation”.
Land Shortage
In reference to the “land shortage”, he pointed out that the islands, “as is not the case elsewhere, are limited in terms of spaces and natural resources that are used, and there is a general consensus in the Balearic Islands to protect spaces that are not yet developed”.
The councillor defended that the Balearic Housing Law “improves the supply of homes in all ways, introduces tax incentives to individuals and improves the services and stability for users”, thanks also to the labor reform, “which makes contracts have a longer duration and, therefore, that those who are searching for housing have more safeguards”. “This is worrying and concerns us as we do not have a mechanism to regulate prices, we have urged the central government to regulate them with the processing of the law, which will allow us to think about a way to control them effectively,” he said.
Property agents call for discussions on sales to foreigners
Developers see the restrictions as unfeasible and believe that the Govern’s strategy has failed
The president of the Balearic Islands Real Estate Agent’s Association, Natalia Bueno, joins the voices that are defending the need to open a debate on the possible limitation on the sale of homes to foreigners, considering that it is this demand and the high prices that explain the strong increase that is being recorded in the archipelago. In this sense, she underlined that at the moment four out of every ten residences sold on the islands are in the hands of non-Spanish nationals. In any case, she considered that the important increases pointed out by the National Institute of Statistics are not uniform, and register notable variations depending on the municipality.
On the other hand, the president of the Balearic Real Estate Developers Association, Luis MartÃn, considered that this is a useless debate since “we cannot leave Europe” and EU legislation prohibits discriminatory treatment among its citizens, hence in his opinion all efforts should be focused on finding ways to ensure that affordable housing is built on the islands, given that the policies promoted by the current Govern “are not working”.
For this reason, he called for public land to be ceded to developers so that they can develop housing at an affordable price, and for the permitted heights and densities to be raised in some areas so that smaller residences, which are in high demand, can be built.
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