This year is proving to be a tough one for various sectors, restaurants are already complaining of a drop in takings of as much as 20 percent. And now it appears that the price of housing, with new record increases month after month, is having an impact on luxury property sales and is causing a decline in the purchase of flats and single-family homes by foreign citizens.
During the first quarter of the year, foreign purchases fell to 30%, the lowest figure since the pandemic. In 2020, residents of other countries signed 29.64% of all sales transactions. The previous year, in 2019, sales by foreigners accounted for 29.41% of transactions. Purchases by foreigners have exceeded 30% of the total for more than a decade.
In the last ten years, there have been two financial years in which purchases by foreigners have accelerated. 2015 marked a record in purchases by foreigners, with 35.61% of transactions, and more recently in 2022, with 34.38% of the total transactions signed in the islands. Property prices are behind this slowdown, according to statistics from the Association of Registrars. The average price per square metre in the islands exceeded £3,800 at the end of March, the highest figure in the history of the region, a 10% increase in just three months.
In addition, most of the purchases made by citizens of other countries are single-family homes, which are more expensive overall as they are larger. Twenty per cent of the 3,898 total purchases made in the first quarter were single-family homes, most of which were purchased by foreigners. A glance at the Idealista property website gives an idea of the prices being asked for this type of property. There are more than 19,000 detached houses and villas on offer in Mallorca, and a third of these, 6,200, are priced at over one million euros. The most expensive property currently on sale is in Son Vida, priced at €39.3 million, at €3,200 per square metre. The second most expensive is in Pollensa, with owners asking €30 million, at €2,200 per square metre.
Real estate agents have been pointing out for months that the spectacular rise in property prices in the Balearics was deterring potential foreign buyers, and the figures from the land registry confirm this, as transactions by citizens from other countries are falling, but not sales in the first quarter. The 3,898 transactions signed in the Balearics represent an increase of 5.8% over the previous quarter and 8% over the same period last year.
Transactions by foreigners fell by 2.78% compared to the last quarter. What cannot yet be said is whether this is a trend that will continue or not, as, with slight ups and downs, property sales by citizens from other countries have always been between 29% and 35% in the Balearics, at least in the last ten years, according to official data from the Registrars.