The Balearic Government considers a ban on non-resident foreigners buying property on the Balearic Islands

The local Government on the Balearic Islands has created a commission to study the possibility of prohibiting the purchase of housing by citizens, foreign or not, who have been living in this region for less than five years, due to the escalation of property prices. According to idealista, the price per m2 in this region closed 2022 at 3,706 euros, up 10.5% year-on-year and crowned as the most expensive place to buy property in Spain, above the Community of Madrid (3,122 euros per m2 or Catalonia, 2,333 euros/m2). This is everything you need to know, as the Balearic Government considers a ban on non-resident foreigners buying property on the Balearic Islands.

Could foreigners be banned from buying property on the Balearic Islands?

The tripartite of PSOE, Podemos and Més put Canada as an example and a model to follow, where on 1st January a two-year ban on selling homes to non-resident foreigners came into force, following a spectacular rise in house prices of 44% in less than two years. Some sectors have criticised the measure, pointing out that less than 1% of the homes sold in the country were purchased by this type of buyer.

In the European Union, other countries such as Denmark and Malta require a minimum number of years of residence in the country, whether resident or non-resident, to be able to buy a home. Outside the EU, Australia and New Zealand have also imposed restrictions on house purchases by non-resident foreigners.

Lack of homes and increasing prices on Spain's islands

The former director general of Housing in the Balearic Islands until spring 2022, Eduardo Robsy, assures the newspaper El País that the rise in house prices is due to an increase in the general population, which has increased demand and, therefore, the rise in house prices, given the lack of supply. And Spain's national statistics office (INE) estimates that the Balearic Islands will be the autonomous community that grows the most in relative terms, by 25%, over the next 15 years, while Spain will gain more than four million inhabitants.

Experts point out that the big problem in the Balearic Islands is the lack of supply, i.e. there are not enough houses. The Balearic National and International Real Estate Association (ABINI) estimates that the region needs 16,000 more new homes.

Foreigners are buying more homes than ever in Spain and at the highest price in history

In 2022, house purchases broke records and the average price per m2 of real estate has reached the highest level since records have been kept. In the luxury sector, foreign demand has even grown more than domestic demand.

Notaries put the number of home transactions in Spain led by foreign buyers at 72,987 in the first half of the year, the highest figure in the historical series that began in 2007. Furthermore, these transactions by foreigners accounted for 20.3% of the total registered in the country as a whole, equalling the record recorded in the second half of 2015; and the average price paid for the properties has reached record highs.

This is a trend that continued in the third quarter. According to the Association of Registrars, between June and September, foreigners bought 26,728 homes in Spain, which represents 15.92% of the total number of registered sales and purchases and a new record in the historical series of this body both in volume and weight of the total number of operations. The figures show a clear and consolidated upward trend and, above all, reflect the notable strength of the home transfer market in Spain.