BALEARIC ISLANDS – Property prices in the Balearic Islands (Mallorca, Menorca, Ibiza and Formentera) are the highest in Spain. However, the trend of rising prices is starting to cool down. The figures in the third quarter are slightly down.
They are thus moving in the same direction as housing prices in all Spanish autonomous regions as a whole. For example, the house price index (IPV) published by the National Institute of Statistics (INE) maintains the Balearic Islands as the Spanish region with the highest house prices in the third quarter of 2022. Prices here increased by 8.3% compared to the same quarter last year.
Moderation of price increase
However, the fall in the annual rate of prices in the Balearic Islands compared to the previous quarter, by 2.6 points, is also the most pronounced at the national level.
The country’s average house price marks a year-over-year increase of 7.6%, although the rate of increase is down 1.4 points. The moderation of prices in the Balearic Islands is therefore part of a process shared by most communities.
The Balearic real estate market will cool down in 2023
According to a study published by Atlas Real Estate Analytics, the real estate market in the Balearic Islands will cool down in 2023. That happens after two years of unusual activity and is largely spurred on by the global context. The climate of uncertainty created by the pandemic and later by the war in Ukraine has also reached the housing market in the Balearic Islands. Although housing also formed a refuge investment for a while, which occasionally caused a price increase in the Balearic Islands. This also exacerbated the already existing housing crisis there.
However, this cooling, at least in the Balearic Islands, will only be reflected in a reduction in the number of buying and selling operations, while house prices will remain stable.
House prices in the Balearic Islands will not fall
Therefore, the study excludes that the fall in activity will lead to a fall in prices: prices will not fall. And this dynamic will be very different from the rest of the country.
Little change in house prices nationally
Looking ahead to next year, forecasts put the overall drop in sales at 15%, the same rate as in the islands. Meanwhile, prices at the national level (-0.9%) and in the Balearic Islands (-0.04%) will hardly change.
Similarly, the study considers the islands to be one of the regions with less “volatile” behaviour in the real estate sector in a possible market recession.
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