Article by the Secret Surveyor.
Knowing whether the price of the average property is going to increase or decrease is key for investors looking at the property market. We are going to lay out some predictions and show a general overview of the trend of property market prices in the Balearics.
GENERAL STATS ABOUT THE PRICE OF THE AVERAGE PROPERTY IN THE BALEARICS:
3 rdmost expensive region in Spain with an average price of m2 of 2272 only behind Madrid and Basque Country. 3 rdregion which has grown the most since 2015
- At one of the highest
pointsit has ever been
When analysing the price of property in the Balearics it is interesting to note that official valuations are much higher than they were at the pre-recession phase. As opposed to the rest of Spain, the Balearics average price of $/m2 is 23% higher than what it was in 2004. This is the only real case of significant price growth in a large region in Spain. The only other regions which
It is in fact in one of the highest points it has ever been.
There is growth but it is slowing down.
The Balearics show strong growth in the last 3 years. Price’s have gone up significantly: since 2015 they have risen by 13% making it the 3rd region with
However, in 2018 there is a significant change: in comparison to 2017 there is only a 3% increase. Opposite to the 2015-2018 period, during this year growth is below the average in Spain. In the last quarter of 2018 change was of only 0,4%, significantly below the average in Spain and one of the lowest quarterly growths in recent years.
Why Balearics has been so strong
Inland Spain was significantly more affected by the property crash than the Balearics:
- Foreign Investment. Balearics wasn’t as dependent on local market and hence demand for property didn’t fall as much as in other regions.
- Luxury market: known to be much more stable in recessions, the Balearics has one of the biggest luxury markets in Spain.
Will prices keep going up?
Balearics have historically been a very strong
The Balearics are a strong stable market as mentioned due to the size of the luxury market and due to foreign investment.
Two key exogenous factors have caused these pillars to cause stagnation:
a) Macroeconomic tensions: Brexit, yellow vests, Trump, Putin… 2018 has been a year full of uncertainty and political tension. 2019’s prediction is uncertain for everyone. Brexit exemplifies how this affects the property market. British citizens (historically one of the strongest buyers in the market) do not know whether there will be any changes in tax payments, regulation or even their rights as EU citizens if they buy a property in Spain. This undoubtedly has
b) Local legislation uncertainty. The Balearic government, and specially the Palma Town hall, has created and changed laws regarding property during their whole legislation. The mayor of Palma is in fact being taken to court regarding a controversial law regarding property rentals. As with foreign buyers, uncertainty is causing many buyers to not buy in Palma and the Balearics.
Will prices keep going up? The market is stagnated. There are however positive signs: Brexit deal looms and there are going to be regional elections at the beginning of 2019 in the Balearics. It would be impossible to give a realistic prediction yet the mere fact that part of the uncertainty will be taken out of the equation will most definitely help the property market.
All data is taken from the official Ministerio de Fomento 2019 document. Find the methodology in: https://apps.fomento.gob.es/BoletinOnline2/?nivel=2&orden=35000000