House prices in Ibiza point to an “overheating scenario”

by Lorraine Williamson
Ibiza houses

IBIZA – The average price of houses in Ibiza points to an “overheating scenario”, with values ​​exceeding those of the real estate boom. 

That is one of the conclusions of the latest Tinsa report, which analyses the value development of houses on the coast in 2022. According to the appraiser, Ibiza is the only area in Spain that is raising the alarm due to the high price levels it has reached. Although in the first quarter of the year an increase of 4.2% year-on-year is generally observed for all houses on the Spanish coast. 

For example, the city of Ibiza already exceeds the highest price in 2008 by 20%. Here, a square metre now costs €3,398. The square metre price in Santa Eulalia between January and March was 18% more than 14 years ago. The price per square metre here is €3,625. The situation repeats itself in Sant Josep de sa Talia and Sant Antoni de Portmany, other towns on the island. 

The scenario worsens when the holiday home market is analysed in detail. These are 300% more expensive in Ibiza than the first homes, according to data from Tinsa. 

Biggest price difference on Balearic Island 

In general, the Balearic Islands have the largest price difference between the two types of housing. Here a second home is worth 90% more than the average in the municipality. The difference is between 30 and 60%. To buy a family home in Mallorca, an average of €5,000 per square metre has to be paid in Mallorca. This is the same as in Ibiza and Formentera. In that sense, single-family homes are becoming a real luxury with amounts up to €10,000 per square metre. 

After the slowdown in 2020 due to the pandemic, the coastal market has generally been reactivated. Half the areas are at the same activity level as 2019, and the houses on the islands have been revalued. As a result, the pre-pandemic price is now up 16%. 

In the first quarter of the year, the price per square metre of holiday homes nationally averaged €2,400. 

Cogesa Expats

The majority (86%) of municipalities analysed the registered annual increases between January and March, with Nigrán (Pontevedra), leading the way. However, the most expensive regions of Spain are concentrated in San Sebastián, Barcelona and therefore Ibiza. The other extreme is occupied by Berja, in Almería, Nules and Almassora in Castellón, or Carballo in A Coruña. In all these areas the price is below €850 per square meter. 

First signs of a slowdown in the real estate market 

The report highlights that there has been an upward trend in sales and mortgage indicators in the first months of 2022. However, given ongoing inflation and reduced growth expectations, some signs of slowing down in the real estate market are beginning to emerge 

Tinsa highlights the volume of new mortgages, which “could indicate greater caution on the part of both the demand side and financial institutions.” 

See also: Spain’s housing bubble is slowly deflating 

Despite everything, the slowdown still does not seem to be reflected in the prices of the holiday homes on the coast. There, demand continues to show a general dynamic in which sales and sales by Spaniards predominate. With a 46% rebound in the past year, pre-pandemic transaction levels were well exceeded. Demand from foreigners has also increased, albeit less strongly: 16% compared to 2020. 

Most Popular Coasts 

The coastlines with the greatest commercial activity in the past year are Alicante and Malaga, followed by Barcelona, ​​even though the latter capital’s coastal market is well behind the primary housing market. The markets along the coasts of Valencia, the Balearic Islands and Cádiz are also very active, according to Tinsa. 

Baycrest Wealth

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