Engel & Völkers' Hans Lenz, president of the ABINI association of agencies operating in the higher-end of the market, attributes the fall to various factors. Firstly, housing is very expensive in the Balearics. The College gives an average price per square metre of 3,644 euros, the highest in Spain.
He points out that financing has become much more expensive, while limited personal financial capacity and the lack of production of affordable homes for residents have led to rising prices. Many people simply can't afford them. "We haven't done anything for 20 years in favour of residents." He trusts that this will now start to change.
The 12.1% decrease compares unfavourably with a national average fall of 1.5%. Certain regions of Spain have experienced quite strong growth in sales. For example, both Asturias and Navarre have recorded 10.4% rises.
The College's figures for the third quarter indicates that 32.5% of sales were to foreigners. More than twice the national average of 14.8%, the Balearics once more had the highest percentage in the country; it typically is around 33%. Valencia with 28.5% was second.
The main foreign market continues to be Germany, Lenz suggesting that a difficult economic situation in Germany and high prices will affect the purchasing power of international clients in the Balearics. He insists that, in many cases, foreigners are buying high-priced houses that the vast majority of Balearic citizens would not be able to afford.
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Many high-end buyers are deterred by the wealth tax. The notion of paying an annual tax on top of other existing taxes for properties above a certain value, coupled with the Balearic government’s policy of claiming up to 3.25% of your global assets if you reside here for more than 183 days per year, ensures that Mallorca will never attract a long-term, stable community of very wealthy expats.