According to the National Institute of Statistics' (INE) latest report, sales transactions in the Balearic Islands fell by 27% on an annual basis in May and by 18% in June of this year, despite growth in most other Spanish markets, where demand from foreign buyers increased. Why has there been a downturn in the Balearic market, when the Costa del Sol for example has seen a robust growth of demand?
Lack of available housing stock is being blamed by industry experts. In recent years, Mallorca and the rest of the Balearics have been Spain's hottest market after Madrid and Barcelona, both in terms of sales transactions and house value increases.
Balearic sales have risen steadily since reaching a plateau in 2013, after the world-wide economic crisis of 2008. Back in 2013, the Balearics counted just around 8,000 sales a year, which had increased to 15,516 by last year, one of the sharpest increases in sales seen nationally.
Mallorca, Menorca and Ibiza have especially attracted wealthy buyers, who were responsible for the longest and most robust recovery in Spanish property sales since the market began to improve.
Now housing supply restrictions, coupled with stricter laws concerning holiday rentals, are beginning to put a break on sales. Mallorca and Co. suffer from a chronic shortage of building land - and those who have secured their dream home in the Balearics are loathe to part with it, causing a shortage of available housing stock. Vendors are now having to be more competitive with their asking prices, too, as even the wealthiest of buyers are looking for value for money.
Over the last 12 months house sales in the Balearics have risen by more than 10% in seven of the 12 months, and only decreased in four, but these months of downturn could be read as a beginning of a trend, according to industry experts.
Demand, however, has remained strong. Home builder Taylor Wimpey Espana reported a rise of 25% in reservations for Mallorca-based property in the year to date, compared to the same period in 2017.
By contrast, Knight Frank International reported a month ago that sales rose by 11% in 2017 for their Costa del Sol business and demand has steadily risen ever since, especially in the prime and super-prime end of the market, where properties sell for more than 4,000,000 euros. These are mainly homes located along Marbella's Golden Mile, in La Zagaleta or properties directly overlooking the seafront. Emerginging markets include Atalaya, Estepona, La Alqueria, El Paraiso and the New Golden Mile, according to Knight Frank International.
Similarly to Mallorca, Marbella also has a severe lack of available building land. This will continue to put prices up, according to industry experts. Buyers are now looking further afield. Estepona has been one of the beneficiaries of this: Estepona's sales transactions shot up by 26% last year due to more affordable prices for listings, as well as the authorities spending significant amounts of money on town centre improvements.