by Staff Reporter

PALMA
IT will come as no surprise that the cost of property in the Balearics rose in the first six months of this year to reach 2'442 euros per square metre.

However, the Islands have fared better than other areas of Spain as the percentage increase over the period from January to June 2007 stands at 3.1 percent, almost one point below the average for the whole of the country which registered at 4 percent.

According to a bi-annual report on new property which was released yesterday by the Valuation Society, the average price of housing rose in all the regional capitals of Spain during this period, with the exception of Vitoria and Segovia where there were, in fact, slight downturns in prices. The three most expensive capitals, said the study, were Barcelona (4'454 euros per square metre), San Sebastian (3'999 euros) and Madrid (3'978) euros.

In the case of Palma, the price of a square metre of constructed property stood at 2'442 euros, reflecting a rise in the year-on-year figure (for the last twelve months) of 9.2 percent, in comparison with the national average in this analysis of 7.4 percent, and of 3.1 percent during the first half of this year.

Looking at major cities throughout Spain, that although are not provincial capitals, are still large enough to claim populations numbering between 50'000 and 25'000 inhabitants, the report reveals that average new house prices in Calvia in the Balearics stand at 2'273 euros per square metre (2.7 percent more than in December 2006); in Ibiza at 2'299 euros (4.6 percent more); and in Manacor at 1'626 euros (1.3 percent more).

The report also analyses the cost of a square metre of property on the coastal resorts. Of note in the Islands are the towns of Ciutadella in Minorca where the price went up by 4.1 percent during the first half of the year to 2'093 euros; and Mahon on Minorca, where it rose by 3.7 percent to 2'107 euros.

The Valuation Society nevertheless reported that the housing market is showing “signs of slowing down.” It also predicted that 2007 will continue to be a year when property will “hold its own” due to increasing interest. This trend, the Society claimed, “will be more prevalent in the suburbs of towns where we may see the first signs of prices coming down.” It said that although there hasn't been a slowing down in demand, the “rhythm of ongoing price rises is starting to break up due to upturns in interest rates and stabilisation in inflation levels.” Overall, the report assured that “the new housing market is still quite active” as is suggested by the number of projects begun and finished during the first half of 2007 in comparison to the same period in 2006. The report forecast that “the demand for new property is still keeping pace with available housing but at a lesser pace than had previously been registered” thanks to the stable growth in the Spanish economy, inflation stabilisation and disposable household income. It said that the property market “will continue to be a major focus for investment compared to other more volatile markets.”

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