Sales in the Balearics in Spain have fallen significantly, down in May and June, but experts believe it could be a lack of homes for sale rather than a sudden drop in demand.
Data from the Land Registry shows that sales were down 27% in May and fell again by 18% in June. This was in contrast to other Spanish property markets popular with overseas buyers.
Mark Stucklin of Spanish Property Insight pointed out that the housing market in the Balearics has been growing strongly since bottoming out in 2013 and has been one of the strongest markets in recent years both in terms of sales and house price growth.
‘Homes sales in the Balearics have increased steadily since bottoming out in 2013 at just below 8,000 per year, to finish 2017 at 15,516, so an almost 100% increase in four years, one of the biggest increases in all of Spain and exceeded only by the small province of Alava in the Basque Region, up 120% in the same period,’ he said.
‘Of all the regions relevant to foreign buyers, and especially upmarket buyers, the Balearics have enjoyed the longest and strongest recovery in property sales since the market turned around, and obviously that trend can’t continue for ever,’ he explained.
‘It was inevitable that at some point home sales in the Balearics would start to cool down, especially considering the housing supply restrictions that affect islands with a shortage of building land,’ he added.
Also, a breakdown of the figures show that Balearic sales have increased by more than 10% in seven of the last 12 months. Stucklin believes that the decline in March was in part due to Easter falling in that month which reduced the number of working days, and he does not attach much importance to the decline in December or March.
Marc Pritchard, sales and marketing director of Taylor Wimpey España, believes that falling sales are to a property shortage and not a lack of demand from buyers. ‘While recent figures for the Balearic Islands show a decrease in sales, this isn’t reflective of the full picture when it comes to the islands’ property market. Much of the declining sales rate is actually attributable to a significant shortage of available properties at affordable prices on the islands,’ he pointed out.
‘Buyers are seeking high quality homes at decent prices and they’re looking to new build properties to deliver what they otherwise can’t find for sale in their chosen locations. The decline in sales therefore doesn’t so much reflect a lack of confidence in the market, merely a lack of supply,’ he added.
The firm has also found that demand for new build homes has risen in other areas, most notably Mallorca. ‘We’re seeing an interesting pattern emerge on Mallorca, with buyers sticking steadfastly to what they want from their property purchases. If they can’t find the right property at the right price, they’re pausing rather than settling for second best,’ he said.
But Alastair Kinloch, a RICS surveyor and head of property works in Mallorca, does hint that prices might be too high. ‘Buyers still want value, even if they are paying millions. Prices seem high, and perhaps too much inflation in asking prices has occurred in the last couple of years, with vendors getting greedy,’ he said.
Lone Schaefer of Kelosa Selected Properties in Ibiza said he is surprised by the figures showing a decline in sales. ‘It is probably more about the apartments market. People sometimes bought several apartments at once to rent them out to tourists. Since the authorities have taken action against illegal letting and apartments are generally not granted a license, this market has declined,’ he explained.
‘But in our market for large villas and country estates I have not noticed any decline. So personally I think it’s probably a blend of factors including a shortage of home that people want or can afford, the holiday rental restrictions turning off some buyers, with some segments completely unaffected,’ he added.
