Lack of land limits the number of new builds at affordable prices. | A. G.

Luis Martín, president of the Proinba developers association, estimates that at least 16,000 new affordable homes are needed in the Balearics - those priced between 200,000 and 300,000 euros. The trouble is, he says, that "there aren't any".

The main reason for this is a familiar one - scarcity of land at a price that is economically viable to be able to build and put properties onto the market. Even so, Martín questions why there is "a lack of action" on behalf of the public authorities and also why "processing is so very slow".

The Balearic government's supply of public housing "is not enough, it is a drop in the ocean". VPO protected housing, he notes, is being used for "emergency cases". "During the first and second quarters of 2022, this was the region where the least public housing was created." The reason, once again, was the lack of land at affordable prices.

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A further factor that makes the price of housing so high is demand from foreigner buyers. Martín says that they are not only looking for second homes, as there is now demand for apartments and villas to live in permanently. The principal locations are by the sea, with prices ranging from 500,000 euros to two million in the case of apartments and between two and five million euros for villas.

Although the European Central Bank has estimated that house prices will fall by nine per cent over the next two years, Martín doubts that this will be the case in the Balearics. "There may be a certain cooling of the market and a stabilisation of prices, but a drop is not being forecast."

Natalia Bueno of the API real estate agents association believes that "if inflation continues to rise, we will see mortgage interest at levels we had in the 1990s; acquiring a first home will be unaffordable". "Rents will continue to rise due to the difficulty of being able to buy, while there will continue to be investors who acquire flats in order to rent out. If we add the low supply of new builds, everything indicates that prices will not fall, unless there is another catastrophe which means that people lose their jobs, put their homes up for sale and find that there are no buyers for them."