Never before has it been so expensive to buy or rent a house in the Balearic Islands. Housing prices broke records last August, surpassing the records of 2007, in the midst of the housing bubble. In the case of the sale, the m2 reached 3,184 euros, while the rent rose to 13.93 euros/m2.
But there is more. The archipelago has not only reached all-time highs, but both the sale price and the rental price have risen to double digits. Specifically, the first rose 10.9% year-on-year, and the second 17.8% year-on-year, according to data from Focasa.
“The Balearic Islands is the only autonomy that has reached maximums. The rise has been the most pronounced since 2019, while the rest of Spain continues 34% below the maximum price of 2007,” they explain from the real estate portal. “In the rent it represents the highest increase since 2017. It is the first time that both markets present historical maximums at the same time on the islands,” they add.
The analysis of the real estate portal explains that the archipelago has already chained 82 months of consecutive increases -since March 2015-. In addition, 28 of them have been double-digit increases. The turning point was the coronavirus pandemic, which moderated increases between 2% and 6%.
What is the cause of the high price increase? Due to the increase in demand and the shortage of product. “The demand to buy a home has risen very strongly, because citizens are looking to purchase a property before mortgages become even more expensive due to the rise in the Euribor. Another important aspect to highlight is the lack of stock of housing in the Balearic market, precisely because its territory is limited. It must be remembered that we have spent a year and a half with extraordinary purchase figures and yet, with a great shortage of product exacerbated by the stoppage and delay of new-build promotions”, comments María Matos, Director of Studies and Spokesperson for Fotocasa.
Regarding the municipalities of the Balearic Islands, the prices of second-hand housing have risen in 14 of the 17 studied by the real estate portal. In three of them, the year-on-year value of housing has risen by more than 20%. These are Capdepera (29.6%), Calvià (27.8%) and Alcúdia (21.3%). On the other hand, the city where house prices fell is Pollença with -11.1%.
Although the rental price already reached 10 euros/m2 in April 2016 (76 months ago), with the arrival of the pandemic, there were price drops for 17 months in a row and then began to rise.
The transformation of the market has been very accelerated, since the monthly rental price has gone from 11 euros to close to 14 euros per square meter in six months, specifically 11.93 euros/m2 in March to 13.93 euros/m2 in August 2022.
“It is a moment that marks a milestone in the evolution of this market in which each time the gap between supply and demand is more considerable. The main cause that pushes the price up is the a very significant reduction in supply that has already been detected since the beginning of the year and the incessant increase in inflation that influences the homes that come onto the rental market.
Looking ahead to the coming months, the expert does not expect changes in trend. “It doesn’t seem like it, even more so if you start from the purchase demand is redirected towards the rental“explains Mathos.
The average price of rental housing in the municipalities of the Balearic Islands is above the national average (10.83 euros/m²) in 13 of the 14 municipalities studied.