Antoni Gayá, the president of the Association of Real Estate Services, says that property prices in the Balearics are over-inflated. One of the “great problems” with the islands’ property market is that prices demanded have “little to do with the market price” and are typically between 20 and 30 per cent higher than their real value. He stresses that this is not an issue confined to Palma but one that exists on all the islands and that excessive prices apply both to properties for sale and for rent.
With properties for sale, Gayà notes, these can often go unsold for several months because the price is too high. Owners don’t want to lower the price, but in some instances do end up dropping it. Official figures suggest that the eventual sale price is often lower than the original advertised price.
Rental properties are a different matter. Although these are overpriced, owners can usually get what they want. Gayà identifies a couple of reasons why: holiday rental and seasonal demand. In the case of the latter, workers who come to the Balearics can find themselves sharing a property - up to six people, each of them paying between 200 and 300 euros a month.
Gayà, whose association represents estate agencies in the Balearics, believes that owners need to be given greater guarantees for them to offer long-term rentals. He is to seek a meeting with the government’s housing minister, Marc Pons, in order to discuss the problem with rented accommodation.
He does not believe that placing a cap on rents is the solution; Pons has announced that the government will be looking at establishing limits. If there were to be a ceiling, owners could take properties off the market because they don’t wish to accept “unnecessary risks” and lower incomes. Gayà prefers a system of financial assistance for tenants and tax incentives for landlords.