Natalia Bueno, president of the API College of Real Estate Agents in the Balearics, is predicting that house prices will rise in line with the growth of the Consumer Price Index, which showed a 6.5% rise in December compared with the previous year. "So long as economic recovery is positive, the real estate market will react favourably." She believes that sales in 2022 will be comparable with those in 2018.
Over the past decade, the sale of homes has reached nothing like the heights of 2007, when over 20,000 transactions were registered. The most recent peak was in 2017 (15,893), followed by 15,665 in 2018. Last year, up to October, there were 11,229 sales, up from 10,684 in 2020.
This upward trend is expected to continue this year, but Bueno doesn't envisage that there will be a new bubble of the kind that there was prior to the financial crisis. "For that to happen, there would have to be a very high volume of sales. It won't happen so long as mortgages are only granted for 80% of the property price."
She adds that it is "impossible" for the majority of Balearic citizens to save up to 20% of the price of a home. Therefore, she is calling for a public guarantee for this amount and so facilitate access to housing for the middle class.
On this, the president of the Proinba association of property developers, Luis Martí, says that despite the high demand from the local market, prices and financial conditions "are a problem". To buy a house for around 300,000 euros, 90,000 must be saved, "an amount that few people have". In addition to 20% of the cost, 10% taxes must be added. In his opinion, the main problem lies in the high price of land, which "is scarce", especially in Palma and surroundings, where there is more demand.
The president of the Balearic Builders Association, Fanny Alba, observes that amendment of the Mallorca Territorial Plan and initial approval of Palma's new general urban plan entail a declassification of developable land that will have repercussions in an increase in the value of the available land. On top of this, the increase in the prices of materials since the middle of 2020 will continue to affect the final price of housing.
Most housing developments are for properties with a minimum price of 250,000 euros. More properties have been coming available, but a good part of the new construction is for foreigners - "the strongest market for two years," Alba notes. The Balearic Islands have been leading the sale of houses to foreigners for years, a trend that is expected to continue.
As for affordability, the president of the ABINI real estate association, Hans Lenz, believes that as prices continue to rise, "the lack of affordable housing will worsen". The Balearics is already the most expensive region in the country. Although there is recognition of Balearic government efforts in terms of social housing, these are insufficient to cover demand. Lenz concludes that "more public-private collaboration is needed to find ways of promoting affordable housing".