The housing market in Majorca is on the brink of crisis as approximately 55,000 people are expected to search for new homes this year. This surge comes despite escalating prices and a critical shortage of available land for construction. According to Jose Miguel Artieda, president of the API association of estate agents, these figures are based on recent trends, population growth, and family size averages.
The Balearic Islands reached a population of 1,249,844 last year, with a notable increase attributed to a growing expatriate community. Currently, 28.6% of residents in the region were born outside of Spain. Artieda emphasized that the rapid demand for housing has resulted in “eleven years of incredible price increases,” which he deems unsustainable given the capacity for housing development and the slow rise in household incomes compared to property prices.
Challenges in the Housing Market
The difficulties facing potential homeowners are compounded by a lack of land available for new projects. Daniel Arenas, representative of the ABINI association, highlighted that the competition in the market is intensifying, with developers grappling with lengthy permit processes for demolishing or renovating existing properties. “Prices will continue to rise so long as there is no more housing supply on the market,” Arenas stated, pinpointing the core issues of land scarcity, slow licensing, and inadequate affordable housing development.
In response to mounting pressure from residents and demonstrators concerned about the effects of overtourism, local officials are implementing measures aimed at alleviating the housing crisis. These initiatives may help increase the supply of affordable housing and facilitate the release of new land for development.
Recent data from the Balearic Ministry of Housing revealed a significant trend: nearly half of properties in some of Majorca’s prime locations are now owned by non-Spaniards. In the picturesque municipality of Andratx, foreign homeowners account for 45.19% of the market. This influx of international buyers has exacerbated the housing shortage and price inflation.
Impacts of Rising Property Prices
Economist Pau Monserrat noted that “around a third of the adult population” in Majorca is currently seeking housing, positioning the island as “the most stressed territory in the country.” With property prices in Spain overall soaring by 18% in the year leading to October 2022, locals with lower incomes find themselves increasingly disadvantaged against wealthier foreign buyers.
In the second quarter of last year, average property prices in the Balearic Islands reached approximately £2,960 per square metre, reflecting a 13% increase from the previous year and a staggering 22% rise over the last two years. Since 2015, average costs have surged by more than 80%, illustrating the intensifying pressure on the housing market.
As Majorca grapples with these challenges, the combination of increasing demand, limited supply, and rising prices raises significant concerns regarding the future of housing in this popular destination. Without effective solutions, the island may face a prolonged housing crisis that could impact its local economy and community dynamics.
