Bricks and mortar is the ultimate investment goes the old adage and in the case of Mallorca this is certainly the case. Property prices in Mallorca rose by a massive 16.5 percent in January, after a surge in demand from buyers rushing to avoid paying higher interest rates.
Nationwide, prices jumped 9 percent in January from a year earlier, according to a monthly index compiled by Fotocasa, a real estate website. That was the sharpest rise since September 2006. The most expensive city was San Sebastian in the Basque region, followed by Barcelona and the capital, Madrid. No prizes for guessing which was the most expensive island.
“We had never detected such a large price increase in such a short period of time,” said María Matos, a spokesperson for Fotocasa. “This increase brings us back to 2006 levels, prior to the real estate bubble when the cost of housing suffered a great increase.”
The price increase will cause some concern in Mallorca because young people are unable to get on the property ladder and there is a big shortage of social housing.
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Many years ago in the early 80's when I first went to Monaco I remember thinking Mallorca will be like this one day. And slowly so it is becoming. The built areas are not so constricted, having far more land to work with, but the wealth is here and increasing daily. I thank god I bought my piece of paradise years ago. However Jason D does have a point. In Monaco I used to get the train very early in the morning, leaving my girfriends flat to get back to the boat in Villefranch. I was struck by the hordes of people getting off the train from Italy. The workers. And every evening back they would go. Monaco is run on cheap Italian labour. And there lies the problem, Mallorca has no such resource close by. In the early days of tourism it was the Andaluces and Extremeños who made the hotels work but they came over for the whole season, No doubt some still do.So the answer has to be large blocks / areas of social housing for the workers. As soon as the problem becomes apparent , gardens are getting overgrown, where is the maid, why cannot I employ anyone etc etc then the rich will demand and things will get done. Wages will have to rise, more and more private security firms will appear to control rising crime in the wealthier areas. The poor areas will have to look after themselves. Property values will not fall, especially country properties and the best city areas. Mallorca will continue for the wealthy, our catchment area is the whole of Europe and that is a lot of wealthy people.
A number of people have been predicting such a collapse for years now. But unfortunately, you're way out of doom season. Normally, it's around end of summer when the predictions of doom are published. This time of year is when the actual statistics indicate that the previously predicted collapse was just wishful thinking. You should wait until about September when all the ominous predictions come out. Then you'll be right in style.
There will come a time where the workers who run the island won't have a place to hang their hat. When this day comes, the island will begin it's fall into ruin. Investors will see their property value fall, service levels will fall (already can be seen) and crime will rise naturally as those on the breadline become even more desperate. Wages are absolutely lagging in respect to the cost of living on this island and its only a matter of time before the whole thing begins to fold in on itself.