Authorities want to make real estate in the Balearic Islands more affordable for locals
Representatives of one of Spain’s most famous political parties have called for constitutional amendments. Officials want to ban foreign nationals from buying property in the Balearic Islands. In their statement, politicians argue that the rising cost of objects makes them unavailable to residents.
It should be noted that this statement from the Spanish side is quite common. Politicians of this and other states regularly propose tightening the rules for acquiring foreign real estate. Concerning the Balearic Islands, in 2021, the proportion of non-residents in real estate transactions was more than 50%. The main foreign buyers of local property are German nationals, accounting for 59% of all non-resident transactions. Although the prohibition proposal is being considered by the relevant bodies of the European Parliament, experts believe this law will not be adopted. The fact is that it would limit the possibility of acquiring real estate on the islands. In addition, the ban will affect the economy, as about 100 thousand people in the region are employed in real estate. 25% of the islands’ GDP comes from this sector.
It is essential to understand that there is a supply shortage in other popular regions of Spain. For example, in Mallorca in 2022, the monthly rent for a flat exceeded a thousand euros, and a room cost more than 400 euros. At the same time, the average income of islanders is 1,900 euros.
The real estate market in the Balearic Islands
Rising property prices contribute to the spread of squatting, which is extremely popular in Spain. In addition, more and more people are living in vans on wheels. There are already whole settlements. These citizens have a stable income but cannot afford to rent housing.
Some experts believe that housing inaccessibility is not in demand by foreigners but in the wrong policies. For example, the Balearic Islands withdrew permission to construct buildings on 53 thousand hectares. Some 20 thousand new flats could have been built on them.
The real estate market in the Balearic Islands has always been in demand from foreigners. While in 2021, almost all European countries showed a decline in activity in the sector, the islands saw an increase of 1.2%. At the beginning of 2023, a square meter in Mallorca was valued at €3,706, and back in January 2022, the figure was €3,459 – an increase of 10.5%. This was the most significant increase in the whole of Spain.