Not even during the real estate boom prior to the 2008 crisis did Ibiza and Formentera reach the number of property sales as now, and houses are currently fetching astronomical prices. From January to October 2022, 1,873 sales and purchases were registered on Ibiza and Formentera, the highest number over those 10 months since records have been kept (2007).
Moreover, this volume over 10 months is even higher than the annual totals of the last 15 years, with the exception of 2017 (2,001 transactions) and 2016 (1,930), although it is taken for granted that both figures will be surpassed once the data from November are released. It is enough to see what was happening in October 2016 and 2017: until then there had been 1,641 and 1,666 sales and purchases respectively in the Pitiusas, that is, more than two hundred less than what we are seeing in 2022.
As already explained in this newspaper by the delegate on Ibiza and Formentera of the Association of Real Estate Agents and the API Association of the Balearic Islands, Jeffrey Fernandez, during the last year (and currently) there was a “spectacular surge” of real estate transactions on the islands. And it is due to the combination of several factors, the perfect storm for a red hot market since the beginning of the year. For example, the high rent prices, unaffordable for most wage earners, who see the only way to find a place to live is to take out a mortgage: it is cheaper than paying rent, even now that interest rates are rising at a pace that has not been seen in the last two decades.
Foreigners lead real estate purchases
Another factor is that of the types of rates: better to take out a fixed-rate mortgage now than in a year’s time, some believe, especially if you take into account runaway inflation, another factor that comes into play. It is better to invest the money in a home than to let it lose value in a bank account: in one year, and with the current drop in the value of money, 300,000 euros can be reduced to a real value of 270,000 in just 12 months. That is the case in Spain, but it is even worse in the UK, where inflation is in double digits and the economy is in a worrying downward spiral. Hence, many of the buyers on Ibiza are foreigners, 60%, according to Fernández, especially British and Dutch, for whom our prices are affordable: they buy real estate here as an investment and as an anti-inflation measure. They are a refuge investment.
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