New homes are being built, but they are mostly for the high end of the market.


Although there is a fair amount of new home building in Palma at present, the president of the Proinba association of property developers, Luis Martín, says that this doesn't represent a "boom". There are some 400 new homes under construction, but the annual demand in Palma is for 2,000.

Martín stresses that these new properties are at the medium-high to high level. In other words, prices are from being generally affordable. The lowest prices, he says, are between 275,000 and 300,000 euros at a development in Son Ferragut. Otherwise, there aren't major developments, they are small-scale, while there is also a good deal of renovation. In areas such as Cala Major and Genova, the prices are high. At 8,000 euros per square metre, properties are more aimed at foreign buyers.

Possible developments, he explains, are being put on hold while the town hall continues to revise its general urban plan. "In addition to the most expensive construction in Spain - twenty per cent more - a perfect storm has been created. We cannot develop affordable housing. The high price of land continues to go up". He is in favour of increasing housing density in order to lower prices.

Sandra Verger of the Builders Association echoes Martín's views. "We cannot build affordable housing. A large segment of the population is in a no-man's land; they cannot access Ibavi* homes and nor can they afford newly built private homes."

One solution, says Joan Cerdà of the College of Architects, would be the rehabilitation of existing housing stock. To this end, the college is negotiating agreements with town halls, not just Palma, for licences. For the town hall, meanwhile, it is necessary to "get more public land", councillor Neus Truyol pointing out the option for more public housing. This could entail private developers ensuring that between 30 and 45 per cent of developments is protected housing at a set price.

Meanwhile, the difficulties with building affordable housing in the city are pushing up prices elsewhere in Mallorca. Proinba notes that prices have risen by up to 50% over the past three years in municipalities such as Inca.

* Ibavi is the Balearic government's housing agency.