Unanticipated Gains for Island Property Market
Latest Balearic Islands property data indicates that the market is defying earlier pessimism over possible long-term consequences of the pandemic by continuing its upward trend.
Total house sales in the second quarter of 2021 showed an annual increment of 158.42%, with a quarterly rise of 42.19%, according to a leading property portal. Meanwhile, total house sales reached almost 4.600 from April to June 2021, a vastly different picture from the decline anticipated by some industry insiders, whilst data published for August indicated a monthly increase of 33.82% on July.
In the Balearics international investors have flocked back to the market being responsible for 37.65% of all transactions. The surge in foreign transactions has resulted in an annual rise of 10.61% in overseas sales and a further increase during the second quarter of almost 6% from the period up to April. Recently published Ministry of Employment and Social Security figures show 29,043 foreign residents were registered in the Balearic Islands at the time, making up some 2.5% of the population.
The return of foreign capital and the acquisition of housing as an investment have proved key factors to the swift and surprising recovery of the market, but a rise in domestic mortgage approvals, reported in August 2021, of 3.9% when compared to the same period of the previous year, has also breathed new life into the market. The National Institute of Statistics (INE) published figures showing an annual drop in unemployment of 2.7% during the first quarter of the year, an encouraging sign for the prosperity of the islands where seasonal employment, badly hit by the pandemic last summer, has traditionally been the mainstay of the economy. The INE also recorded a slower growth in the price of housing throughout the whole of Spain, ending the first quarter of 2021 at just 0.9%.
The TINSA price index, however, which uses data collected while conducting property valuation of roughly 2% of the Spanish real estate market, indicated a year-on-year increase in July of 4.9%. This hike in value was driven by the Mediterranean coastal regions which saw an average price rise of 8.4% and the Balearic and Canary Islands where property values increased by 7.9%. The high-end market in such regions has continued to generate demand reflecting a new demographic of foreign buyer with deeper pockets and an appetite for a better quality of life.
The Balearic Islands have some of the most luxurious and exclusive properties, thereby generating a demand that will always outstrip supply. Potential homeowners are also looking for a different type of property in the post-pandemic era, the most popular being those providing more outdoor space and facilities for extended stays. The general trend points to a moderate and sustained growth in the Spanish property market and experts forecast that this will continue. The Balearic Islands will, undoubtedly, lead the way in this recovery due to the appeal they hold for visitors.
Not only do the islands provide stunning natural surroundings but they also offer a sound and potentially highly lucrative investment opportunity.
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