Balearic Islands: Square meter prices rise sharply – second-highest level in Spain

Prices are rising — and sharply

On the way to the bakery in Palma this morning (a little rain, a November breeze) I heard someone say: "Rents are shooting through the roof." No wonder. In the third quarter prices for available apartments rose sharply — by around 14.5 percent year-on-year. That brings the average to about €3,672 per square meter. Only Madrid is higher.

Why it's climbing so steeply

The reasons are fairly concrete: supply is tight and demand remains high. Many flats are second homes or are rented out short-term. International buying pressure meets islands with limited building land. The demand for holiday properties here at Cala Major or along the Passeig Marítim also creates additional scarcity — and thus rapidly rising prices.

You can see the result on shop doors, in conversations at the market and in the long queue outside the municipal office for social housing. No wonder the Balearic Islands are about 70 percent above the Spanish average in terms of square-meter prices.

What this means for locals

For families, young professionals and shopkeepers this means longer commutes, less choice and often higher ancillary costs. Waiting lists for affordable housing are getting longer, and those who want to stay close to their jobs often pay extra.

In some municipalities, countermeasures are now being discussed — from stricter rules for short-term rentals to subsidy programs for social housing. Will that work quickly enough? There is much skepticism. Homes are not built overnight, and construction projects are often legally challenged or delayed.

Looking ahead

In the short term, further upward pressure on prices is to be expected as long as supply and demand remain imbalanced. In the long term, measures such as targeted new builds with social clauses, higher transfer taxes for investors or stricter usage requirements for holiday flats could have a dampening effect — provided they are implemented consistently.

Anyone looking for a property in the coming months should brace themselves: good advice, patience and a realistic budget are more important than ever. In the city there are even rumours that some estate agents are already scheduling viewings into the evening — because demand is no longer limited to the mornings.