Balearic Islands: Housing Becomes a Luxury — Who Will Stay on the Island?

Balearic Islands: Housing Becomes a Luxury — Who Will Stay on the Island?

Early in the morning at the Plaça del Mercat in Palma: the scent of coffee, the clatter of market crates, voices grumbling about delivery costs — but threaded through the conversations is also concern. The average price per square metre in the Balearic Islands now stands at €4,051, an increase of around 8.6% year on year, as reported in record property prices in the Balearic Islands. The figure is more than a statistic: it is changing streets, schools and café conversations.

The central question

Who will Mallorca belong to in the future — those who can afford the prices, or those who work and live here? This is not just a rhetorical question. It determines whether a baker in Son Oliva can continue to bake his rolls in the morning or whether his customers will eventually be replaced by more expensive, tourist‑oriented offerings.

What is concretely changing

A 90‑square‑metre flat now quickly costs €360,000 or more. In Cala Major or on the Passeig del Born potential buyers often immediately focus on fittings and location — budgets are being stretched. Supply is scarce, international buyers are often financially strong, as described in foreign tenants displacing residents in Mallorca, and add extra upward pressure on prices. But it is not only buyers who feel it: shop rents rise, families move to peripheral districts, commuting distances lengthen. More bus rides, more time on the Ma‑15, less time for neighbourhood life.

Who loses the most?

Clearly: locals with limited incomes. Pensioners on small pensions, young couples without family support, craftsmen and workers in tourism. Holiday rentals and second homes drain the best locations — sometimes literally empty: flats standing vacant outside the season change the social fabric. At the baker in Son Oliva three families have moved away in recent months — small shifts that together alter the environment: schools shrink, clubs lose supporters, village shops open less often.

Why prices are really rising

The usual answers are no longer sufficient: yes, demand is high, new construction is low, construction costs have increased. But there are other, often less noticed drivers: a lack of municipal land policy, insufficient data on vacancy, and tax incentives that make holding second homes attractive, discussed in part by the Spanish Ministry of Transport housing policies (Mitma). In addition, foreign buyers often pay in cash or with large equity — that accelerates price increases. In short: market mechanisms meet a political structure that does not react quickly enough.

What is missing from the debate

The long‑term effects on the economic structure are often underestimated. If workers are pushed further into peripheral zones, commuting costs and times rise, which in turn reduces the attractiveness of certain jobs. City‑centre schools could become fragmented, local businesses disappear. Ecological questions also play a role: longer commutes mean higher CO₂ emissions and more traffic on the island's narrow roads.

Concrete steps that could help

There is no quick universal solution — but a number of practical measures that, combined, can have an effect:

- Use municipal pre‑emption rights: Municipalities should selectively buy flats to keep them permanently available for locals, in line with Balearic government housing policies.

- Vacancy and second‑home taxes: Stricter taxation of permanently vacant holiday flats would create incentives for long‑term renting.

- Social housing and cooperative models: Faster, targeted new construction and cooperative housing can relieve middle‑ and low‑income groups.

- Conversion instead of new builds: Converting vacant offices or older hotels into residential units saves space and time.

- More transparency: Better data on ownership structures and vacancy enable more targeted political interventions, supported by INE official housing price statistics.

What is possible in the short term

Municipal rent subsidies, tiered benefits for local workers and stricter controls of holiday rentals can have rapid effects. In the long term, however, political majorities and the courage to implement measures affecting property rights, the tax system and urban planning are needed.

Looking ahead

The situation is serious — yet not irreversible. On many neighbouring benches people discuss ideas: a neighbourhood fund, a cooperative initiative, agreements between municipalities and hotels for interim use outside the season. Small steps can change the picture if they are thought through systematically.

Conclusion: The Balearic Islands lead Spain's price statistics, and this has direct consequences for everyday life. Politics, municipalities and citizens must act faster and bolder, otherwise housing on the island will become a luxury for many. And that would change Mallorca itself — not just the prices on the surface.