More homes in the upper price brackets in the residential housing market in Mallorca are being sold, up 13.8% in 2017 than in the previous year, according to the latest market report.
It comes at a time when prices across the Balearics have been rising, up since the end of 2014, according to the Mallorca Insight Report from international real estate firm Knight Frank.
Indeed, Knight Frank expects prices to continue to rise in 2019 and the report points out that only 1,842 new residential units were built in the Balearic Islands in 2017, suggesting that supply is not strong. This was down from 12,162 built a decade ago.
The report also reveals that Mallorca is seeing a broader mix of overseas buyers with interest from Scandinavia, Belgium, and Holland, as well as traditional buyers from Germany and the UK.
Mark Harvey, head of the European Sales Network at Knight Frank, believes that Mallorca is emerging as a viable weekly commuter option for Northern Europeans with work commitments in cities such as London, Frankfurt or Stockholm.
‘The island has registered strong prime price growth in the last two to three years and whilst prices are expected to continue following an upward trajectory in the medium term, cushioned by a lack of new supply, the rate of growth may slow slightly presenting a potential buying opportunity for some looking to enter the market,’ he said.
The report points out that even although prices are rising, on average up 23% since the economic downturn, they are still 9% below their peak in the second quarter of 2008.
Average prices across the exclusive South West region increased 8% in 2018 according to the Centre for Real Estate Studies, with average values now close to €6,250 per square meter, whilst prime values are in excess of €10,000 per square meter.
It explains that Mallorca’s property cycle is two or three years ahead of that on mainland Spain. ‘We expect prices to continue rising in 2019 but we may see sales volumes weaken due to a degree of uncertainty in the run up to the UK’s exit from the European Union in March,’ Harvey explained.
The report also looks at the issued relating to bans on short term rentals. In July 2018 the city of Palma banned the short term rental of less than a month of apartments, although long term rentals of a month or more are still permissible and do not require a licence.
Outside of Palma short term lets are still allowed but a license is needed and all rental income has to be declared. The Council of Majorca plans to introduce a holiday rental zoning scheme for those areas that attract the greatest volume of visitors.
Mallorca’s South Western corner represents the island’s most upmarket locations and stretches across five distinct markets, from Bendinat in the East to Portals, Son Vida, Santa Ponsa and Port Andratx in the West.
New build properties with sea views generate strong demand, particularly those priced between €5 million and €7 million. Those seeking value usually target the South East of the island, here values are lower but there are fewer amenities such as marinas, good roads, and restaurants, the report adds.