The rising cost of materials finally led to a revision of values. | Pere Bota

An agreement reached last summer between the Balearic government and property developers holds the key to the building of 14,000 new homes at affordable prices.

This was an agreement to raise the appraised value of protected homes. The government's director-general for housing, Cris Ballester, explains that this hadn't increased since 2008. It was the rising cost of materials that ultimately pushed the government into making increases, Ballester saying that "the developers were happy with the update of maximum prices, which allowed construction to start up again".

Even with the increased values, these are homes that are priced around 50% lower than ones on the free market. The prices vary according to category of municipality. The A category includes Palma plus the likes of Andratx, Calvia and Pollensa. A fifty square metre apartment (as an example) is valued at 129,750 euros; on the open market it would be more like 250,000 euros.

B category municipalities include Algaida and Felanitx; the C category, Petra and Santa Eugenia. These are determined by comparative land prices and so in a C category municipality a 50 square metre apartment is 96,150 euros. In terms of rent, the price for the same apartment ranges from 378 euros per month in a C category municipality to 504 in an A category. In Palma, for instance, it is difficult to find an apartment to rent that is less than 1,000 euros.

These values do also vary according to building energy efficiency. An A label adds some 5,000 euros to the price compared with homes with a B label.

Related news

Some 8,000 of these 14,000 new homes are currently subject to municipal planning procedures.