Rents in the Balearic Islands: Who Pays the Bill for +8.5%?

Rents in the Balearic Islands: Who Pays the Bill for +8.5%?

Housing is becoming noticeably more expensive — and not everyone benefits

The numbers are clear: in 2025 average rents in the Balearic Islands increased by 8.5 percent to €19.1 per square metre. In Palma a rise of 6.4 percent was recorded; the average rent there is now €18.3/m². On Ibiza the increases are even more pronounced: Sant Josep de sa Talaia reports +18.2 percent, Sant Antoni de Portmany +17.9 percent. These figures say less about individual apartments than about a trend that is felt in everyday life. This trend is explored in Balearic Islands: Rents to rise by an average of €400 in 2026 — who will pay the bill?.

Key question: How long can the model "island as a holiday and investment destination" remain viable for the local population — and which measures would actually relieve pressure on rents, a concern also raised in Balearic Islands: Housing Becomes a Luxury — Who Will Stay on the Island??

Critical analysis: the increases are no accident. In the Balearics, limited space, strong tourist demand and a booming short-term rental market meet a local economy with many seasonal jobs and moderate wages. When apartments are more attractive as investments or holiday properties than as permanent homes, supply shifts in favour of short-term rentals. At the same time, new construction is often planned with returns in mind; social rental housing falls short of demand. The interplay of demand, supply and regulatory intensity creates upward pressure on prices, which is especially visible in popular places like towns on Ibiza.

What is often underplayed in public debate is the fine gradation within the islands. An average of €19.1/m² conceals the fact that there are neighbourhoods, building ages and apartment types that are far above or well below that level. The household perspective also matters: the same square metre price has existentially different implications for a low-income family than for a commuter with a permanent job. The role of vacant second homes and the actual conversion rate from long-term to short-term rentals also often remain underexposed in discussions.

An everyday scene: morning at Mercat de l'Olivar in Palma. Between fruit stalls and the smell of coffee you hear the same rhythm as in many apartment blocks: delivery vans park, the caretaker repairs a stair railing, a young woman carries her baby into an old building with a narrow balcony. Many neighbours there work in hospitality or tourism; their wages are seasonal, yet housing costs keep rising. For them the rent increase is not an abstract statistic but a choice between longer commutes, smaller apartments or moving to the mainland.

Concrete approaches without a magic formula: first, strategically expand and renovate municipal housing stocks. Municipalities can identify plots, specifically promote social housing and involve public partners. Second, better register vacant second homes and levy a higher tax on long-term vacancy — this increases the incentive to rent on the local market. Third, create tax incentives for long-term rental contracts instead of short-term holiday lets. This could be done through reduced charges or simplified permit procedures for owners who rent permanently to residents. Fourth, local rent registers and transparency in listings: a reliable data basis helps cities like Palma or municipalities on Ibiza plan targeted measures. Fifth, subsidy programmes for worker housing in tourist centres: hotels, resorts and large employers could invest in municipal housing projects and thus take pressure off the private market, as noted in Rental aid in the Balearic Islands: €9.3 million from November – who benefits, who is left out?.

Politically, two steps are important: design regulations to be effective, and at the same time minimise bureaucratic burden so that resources work quickly. Measures such as caps on short-term rentals are of little use if they are not enforced. This requires staff, digital reporting systems and clear sanctions.

For Mallorca this means concretely: those in Palma who talk about rent freezes or exclusion zones must also quantify how many new affordable units should be created each year, a point emphasised in Payday 2026: Why Many Renters in Mallorca Have Reason to Be Afraid. On Ibiza, where percentage increases were larger, bans on holiday rentals alone help little in the short term if replacement housing for locals is not created at the same time.

Punchy conclusion: higher rents are not a law of nature, but they are the result of political choices, market mechanisms and everyday realities. The simple message to politicians and municipalities is: create data, fight vacancy, build affordable housing — and do not forget the people who hurry to the market, the construction site or the restaurant in the morning. Short-term measures are possible; long-term solutions require planning, money and the political will to treat housing as a common good and not just as an asset class.