The rise in the CPI in recent months is the highest since the early 1990s. | Archive

Rental prices remain stable in the Balearic Islands for now, despite the fact that contracts may include, by law, the rise in the Consumer Price Index (CPI) at the beginning of the year.

In the absence of the definitive data for December, everything points to an increase in prices close to 7%, since the leading indicator for Spain as a whole stood at 6.7% in the last month of the year. This increase in prices, mainly due to the rise in the cost of energy and fuels, has already been transferred to the rest of consumer goods. If applied to rents, the increase would be significant, as the rise in the CPI in recent months is the highest since the early 1990s. However, the majority of property owners in the Balearic Islands decline this option, according to the president of the Association of Real Estate Agents (API) of the Balearic Islands, Natalia Bueno.

According to her calculations, only about a third of the owners have opted to apply the CPI increase to the current rental contracts. However, this price increase has only been registered in the lowest rents, i.e., those between 600 and 700 euros, "provided that the tenant can afford it", in the words of Bueno. She added that the landlord has taken into account the tenant's employment situation and that, therefore, he is not affected by a temporary suspension of employment (ERTE). On the other hand, most landlords choose to maintain the prices as long as "they get paid on time and do not have problems with the tenant", explained Bueno. The API president explained that landlords are looking for stability.

Regarding the situation of the real estate market, she assured that at the moment prices are stable, both for renting and buying and selling. This is due to the fact that demand has not undergone major fluctuations and has rather evolved downwards, in line with demographic pressure. "There is no great 'boom' in demand since the Balearic Islands has lost population in the last year," Bueno admitted.

All in all, signing a new rental contract is not easy in the Islands. "Citizens who opt for this option is because they cannot buy, but they are not exempt from difficulties as they must present guarantees of solvency," recalled the president of the APIs. On this issue, she added that many Balearic workers only have temporary contracts, which makes it increasingly difficult for them meet with all the rental contract requirements.