Mallorca becomes unaffordable: the housing shortage as a systemic problem

Mallorca becomes unaffordable: the housing shortage as a systemic problem

Guiding question: How can the island solve its housing problem so that locals and the economy are not the losers?

Those who walk along the Carrer de Sant Miquel in the morning hear more construction trucks than children's laughter. On the Passeig Marítim taxis park, tradespeople unload equipment vans — and in many side streets signs hang: 'Se alquila por temporada'. The scene is typical: sunshine, tourists, and at the same time the quiet tightness of an island that increasingly denies its residents the possibility of living there, as documented in Sky-high prices, tents, empty promises: Why Mallorca's housing crisis is no longer a marginal issue.

The numbers make the problem visible. In 2024 almost 10,000 new households were formed in the Balearic Islands; fewer than 3,000 apartments were built. More than 24,400 rental contracts will expire in 2026. About a third of purchases are made by buyers from other European countries. And middle incomes — a frequently cited example: €2,000 net per month — in many places are no longer enough for a stable apartment, a situation examined in When Living Rooms Become Bedrooms: How Mallorca Suffers from a Housing Shortage. This disproportionate demand meets a persistently tightened supply — a classic market failure, a trend detailed in Balearic Islands in the Price Squeeze: Who Can Still Afford Mallorca?.

Critical analysis: The situation is not a short-term price phenomenon but the result of cumulative decisions. Instead of a balanced housing stock, short-term holiday rentals, second homes and investment purchases dominate. At the same time there is a lack of affordable multi-family buildings and sufficient social housing. That depresses wages and ties up purchasing power: those who spend more of their income on rent spend less in local shops and on services. Employers complain that they cannot find or retain staff because accommodation is lacking — a real location risk for tourism and crafts.

What is missing in public debate: First, the connection between short-term tourist use and long-term housing shortage. It is not enough to discuss rent caps or building quotas without addressing the turnover caused by holiday rentals. Second, an honest debate about land-use policy and construction costs is lacking: on an island with scarce land, land use determines housing availability, not subsidies alone. Third, the role of employers and industry representatives is often overlooked — they could take more responsibility for housing provision but rarely do.

Everyday perspective: On a grey morning in Inca a cleaner stands in front of a high-rise at 7 a.m. waiting for the bus to Arenal. She barely makes ends meet and has no chance of getting her own flat nearby. In Palma, technicians deliver equipment to a construction site in Son Gotleu; many of them commute long distances every day because prices in the residential areas are simply unaffordable. These examples show: those who keep Mallorca running often live on the outer edge or do not live here permanently anymore, a reality also addressed in Mallorca's Streets Are Growing Longer: Why More Than 800 People Are Homeless and Nothing Solves It by Itself.

Concrete approaches — not as a miracle cure, but as a combined plan:

1) Priority for housing instead of holiday rentals: Binding municipal quotas for permanent housing in new development projects; bans on converting rental apartments into holiday accommodation in particularly affected zones; stronger controls and sanctions against illegal short-term rentals.

2) Accelerated social housing construction: A public housing program with clear target numbers, supported by regional loans and simplified approval procedures. Use of municipal land and vacant office space for conversion into apartments with social bindings.

3) Financial incentives and reallocation: Tax relief for owners who rent long-term to local tenants; higher property taxes for vacant or permanently tourist-used properties; a fund that temporarily supports tenants in hardship cases.

4) Employer participation and cooperative models: Support programs that help companies build or rent employee housing; cooperative models in which residents become co-owners and create price stability.

5) Spatial planning and tourist tax: Stricter land-use plans that scrutinize new construction for sprawl; adjustment of the tourist tax so that revenues flow specifically into housing; targeted limits on new second homes in particularly burdened municipalities.

What is politically missing is the courage for combined policies: new construction alone without demand limitation falls short; regulation alone without replacement supply shifts the problem. A package of regulation, investment and local management is needed.

Dashed conclusion: Mallorca stands at a crossroads. If the housing market continues to be treated primarily as an investment area, the island risks losing its social base: tradespeople, teachers, caregivers, service staff. That would not only be a human failure but a structural risk for the economy.

In the end the question is banal and urgent: Do we want an island that mainly receives money, or an island where people can live? The answers require clear priorities, fast administrative processes and the will to reconcile holiday culture with everyday life. Without both, the streets will continue to be full — with tourists and with people looking for a home they cannot find.