Following the financial and economic crisis in Spain caused by the residential real estate bubble (which saw property prices in the country rise 200% from 1996 to 2007) the real estate market slowed down, and logically, as a result of the decrease in demand for buying houses, there was an increase in the demand for renting houses..

Overtime, this situation lead to a concerning rise in rental prices to a point that long term rental prices got too close to touristic rental prices.

According to real estate reports from 2018, throughout Spain, house selling prices will have increased 11% and the number of house sales 23% by the end of the year. In the Balearic Islands and more so in Mallorca, 2018 was definitely well-marked by the increase in both indicators and the tendency for 2019 is that this positive trend will continue in supply, as well as in demand and prices, probably reaching a peak during 2019 and starting to slowly decrease towards 2020.

Although banks have been cautious granting new mortgages, also to avoid a new real estate bubble, the truth is that financing costs are not too high at the moment, job market is stable and with a boost in consumer confidence, buying a house is extremely appealing as an investment, so it all indicates that the real estate market will continue to grow until 2020 or until the moment when financial effort reaches its limit. This is due to the fact that the cost of buying a house has increased around 6% during last year whilst salaries not even 1%.

There are no signs that a new crisis will surprise Spain, the country’s economic growth is not based on this real estate favourable period, but on exports and capital goods investment. Therefore, experts in this sector guarantee that now is a good moment to invest again in real estate, especially in new residential areas.

Regarding foreign investment, the Balearic islands have been gradually extending the multitude of international buyers, who take advantage of strong tourism numbers and significant infrastructure improvements over the past few years. The island’s tourism growth caused the need for legislative and infrastructure improvements that came to reinforce the already well established residential property market. 

Nowadays, the luxury property market is really strong in the islands and it keeps drawing the interest of wealthy investors from Germany, Switzerland, Austria, Scandinavia, Britain, etc., so in this sector the expectations for 2019 are also of continuous growth.

Specifically about British investors, Brexit did initially cast a shadow on the continuous growth of the real estate market (both house sales and touristic rentals) in the Balearic Islands, as it is undeniable that British nationals are important real estate investors in the islands and the largest represented foreign nation in Balearic tourism statistics. However during the last 2 years since the Brexit vote, British numbers in the islands have not decreased and in fact some say that house sales to British people might actually increase before Brexit is definitely in place – reason to say that British buyers are undeterred by Brexit.