Property prices in the city rose by six percent during the second quarter of the year. | ARCHIVO

House prices in Palma rose by a record breaking 6.3 percent in the second quarter of the year confirming the fact that the city is one of the most sought after places to live in Spain if not Europe. According to property valuers Tinsa, overall property prices across Spain rose by 2.7 percent but in the Balearics the overall picture was not so upbeat with a fall of 0.3 percent.

Palma is obviuously the bright spot of the property market in the Balearics helped in no small part by a SundayTimes report which said that it was the best place to live in the world. Investors from across the world have been buying properties in central Palma over recent years with the Santa Catalina area proving to be exceptionally popular. The shortage of homes in the heart of Palma has meant that the boom has spread to other neighbourhoods which until recently were not that fashionable. Engels & Volkers, the leading property company, have recently opened an office in the Playa de Palma and it is reported that investors, mostly German and Scandinavian, are looking at other parts of the city. But the Tinsa report also warned that property prices are still below pre-recessions levels in 2007. “We have a changing property market at the moment, with some areas doing much better than others. The average price across the country is 1,245 euros per square metre, 40 percent cheaper than the price in 2007,” said Tinsa.

Nine months to sell home
The company also said that it was taking an average of nine months to sell a house, apart from some exceptions such as Madrid and Barcelona, where it is about three months.

On the mainland it is the big cities where there is enormous demand for properties. In the rest of the country the picture is varied. The property market in Spain has recovered from the depths it hit during the recession but is still has a long way to go if it is to return to values registered before 2007. The Balearics has done better than the rest of the country with prices climbing over the last three years. The fall in the value of sterling against the euro and fears over Brexit has meant that the British market has fallen but the drop has been counterbalanced by an increase in Scandinavian and Swiss buyers. The British market has fallen by around 15 percent.