Ibiza, from mega-luxury to shanty towns: the housing crisis gripping the island

Ibiza has two faces. On one side, the Ibiza of mega-luxury: vast, exclusive nightclubs and dream-like villas. On the other, an Ibiza of shanty towns and housing exclusion. It's no longer news that soaring property prices are forcing people to leave the island because they can no longer find homes at affordable rents.

“I tried everything to renew my rental contract with my landlord, but once the legal extensions ran out, it was impossible. He simply wasn’t interested. In my case, I was lucky because I run an online shop and could move to León with my family. But I have friends from Ibiza who have had to leave the island because they couldn’t afford the rent. And buying a home? Not even worth mentioning,” Nerea S.M. told idealista/news.

Nerea says that after leaving, she saw her former flat listed on a holiday rental platform – something she had expected. The continuous rise in house prices is affecting many residents across Spain, particularly in areas where rental supply has been declining for years. The problem is especially acute in the Balearic Islands, where space to build is limited.

Several factors contribute to this situation: insufficient construction, government intervention in the traditional rental market discouraging landlords, and the higher returns offered by holiday or short-term lets, among others.

According to data from idealista, the average rental price in Ibiza stood at €25.3/m² in February 2025. The fact that this is the most recent available figure suggests that rental properties vanish as soon as summer approaches, leaving too small a sample to determine an average. As for the average sale price, in June 2025 it reached €6,751/m² – an unmanageable figure for the vast majority of Spaniards. The highest price on the island is in Marina Botafoc - Talamanca (€7,534/m²), and the lowest is in Figueretes - Platja d'en Bossa (€5,738/m²).

Despite having a population of 159,180 (2023), property prices in Ibiza are comparable to – or even higher than – those in Spain’s major housing markets. For instance, the average sale price in the municipality of Barcelona is €4,920/m² and average rent is €23.9/m². In Madrid, it's €5,642/m² and €22/m², respectively. This comparison highlights just how overheated the Ibizan market is.

“Before leaving Ibiza, I tried everything to find another flat, but most places were being rented at eye-watering prices and only on a seasonal basis, once summer had ended. I even considered living in a 30m² studio for €1,000 a month, but in the end, I ruled it out. When I looked into buying, reality hit even harder: tiny houses at outrageous prices or properties where they were only selling part of the home,” Nerea recalls. “I know someone who ended up paying the owner of a plot of land to live in his vehicle.”

High property prices in islands like Ibiza aren’t just forcing residents out – they’re also fuelling a resurgence of an all-too-familiar problem: shanty towns. These types of settlements have spread across the island, to the point where Ibiza is now referred to by some as a “caravan city.” Many are forced to live in vehicles or makeshift dwellings just to be able to keep working on the island.

In fact, on 15 July 2025, police began the eviction of 200 people from the largest illegal shanty town in Ibiza, located on the private estate of Can Rova 2. The settlement consisted of substandard housing, mostly occupied by seasonal workers who couldn’t afford market rents. The site had emerged following the 2024 eviction of a similar makeshift camp on nearby land.

And this wasn’t an isolated incident. On 7 July 2025, Ibiza’s local council cleared another shanty town in es Gorg, in the GESA industrial estate near IKEA. This one comprised caravans, camper vans, converted vans and tents. The situation has led to bizarre scenarios, such as an Airbnb listing offering a van for €101 a night in July – rising to €110 in August.

As mentioned, the lack of affordable housing is pushing many workers off the island – such as the well-known case of Sonia Sancho, a nursing assistant at Can Misses Hospital. She was forced to relocate to Ciudad Real due to high rents. Though she only paid €450 in rent there, the working conditions and work-life balance were worse, so she eventually returned to Ibiza and now lives with her mother.

That same hospital had to repurpose a disused wing, converting old patient rooms into individual accommodation for doctors and nurses arriving in summer with nowhere to stay. What began with eight rooms now exceeds 40.

What is being done to address Ibiza’s housing crisis?

Will Ibiza’s housing problem ever be solved? The Balearic Government has launched an emergency plan in partnership with local councils, featuring various measures and initiatives. For Ibiza, this includes the construction of over 1,000 affordable homes for residents.

“One of the measures adopted by the Government – and applied by councils of all political stripes – is to prioritise affordable housing for residents who have lived on the islands for at least five years (both for access to social housing and to a new category of capped-price housing, both below market rates),” sources from the Department for Housing, Land and Mobility told idealista/news.

“With the emergency plan driven by Marga Prohens, President of the Balearic Islands, measures are being implemented to speed up the development of social housing while also collaborating with the private sector. The aim is to tackle the housing crisis from all angles, as it affects not only vulnerable groups and low-income individuals, but also young people, workers, and the middle class. At the same time, the island councils are ramping up efforts against illegal tourist lets, in order to recover housing for the resident market,” the Department added.

In total, more than 1,000 new homes for residents are planned, through public developments, public-private partnerships, and new legal mechanisms.

“In terms of public development, the Balearic Housing Institute (IBAVI) is driving forward 276 new homes, in addition to the 60 already under construction. This represents a significant step, increasing the stock of public housing in Ibiza by nearly 195%, where IBAVI currently manages 174 homes,” the government explained.

The Government is also promoting four new social housing projects on two plots donated by Ibiza City Council and two others donated by the Consell of Ibiza. There are also plans for one of the plots in the upcoming Ca n’Escandell development (with the remaining two plots expected to be developed by SEPES), as well as 200 new supported accommodation units in Eivissa.

As part of the emergency plan, the Construir para Alquilar (“Build to Rent”) programme will see more than 600 homes built in its first phase via the Emergency Housing Law. Specifically:

• 311 homes will be built on two plots provided by the Ibiza City Council, through a public tender led by the Government.
• Around 300 homes will be constructed on three plots from Santa Eulària Council, which is running its own process.

This programme is based on the transfer of public land to the private sector for the construction of social or capped-price housing.

In addition, at least nine homes are planned under the Emergency Housing Law, which allows for the conversion of commercial premises into capped-price housing.

Under the Lloguer Segur (Secure Rental) scheme – aimed at bringing empty homes into the rental market at prices 30% below market rate – around 20 homes in Ibiza are currently being processed, pending completion of the required documentation.

“All of this is in addition to a new decree-law aimed at increasing the supply of affordable housing across the archipelago. This regulation introduces the figure of Strategic Residential Projects, which will allow for the release of urban and developable land and streamline planning processes.”

During parliamentary proceedings, the Government reached an agreement with the VOX parliamentary group to expand the scope of the decree. Among the key changes is the extension of Strategic Residential Projects to all municipalities with more than 10,000 inhabitants. In Ibiza, this includes the municipalities of Eivissa, Santa Eulària des Riu, Sant Antoni de Portmany and Sant Josep de sa Talaia.

Meanwhile, the Department for Education has launched a programme to help teachers in Ibiza and Formentera access housing – a move designed to retain and attract talent in these islands facing intense housing pressure.

Separately, the Government has also announced an €8.13 million investment to crack down on illegal rentals and unlicensed activity in the tourism sector, with a strong focus on unauthorised holiday lets.

Will this package of measures be enough to fix the housing crisis? Only time will tell.