Spanish Island Property Prices Soar, Pricing Out Even British and german Buyers
Madrid, Spain – House prices on Spain’s Balearic and Canary Islands have risen dramatically, becoming increasingly unaffordable even for traditionally strong foreign buyer groups like British and German nationals, according to a report by InSpanje.nl. The surge is driven primarily by sky-high housing costs, with average prices per square meter climbing significantly in recent years.
The average price per square meter on the Canary Islands rose by 14.1% compared to 2024, while the Balearic Islands saw an increase of 9%. This outpaces the national average price increase of 7.6%.
The report highlights a significant price disparity between residents and non-residents.Non-residents currently pay an average of 3,126 euros per square meter,considerably more than Spanish buyers who average just below 1,900 euros.
Real estate agents in Mallorca and Tenerife, as cited in Xataka, report that foreign buyers are increasingly looking to mainland Spain for more affordable options.
Several factors contribute to the pressure on the island housing markets. Limited space for new construction, coupled with the proliferation of short-term holiday rentals via platforms like Airbnb, are significantly reducing housing availability. The situation is impacting local residents, with reports emerging earlier this year of Canary Island employees being forced to live in campers due to unaffordable rental costs – even these campers are now being utilized for tourism.
Recent changes to Spain’s “Golden Visa” program, which previously granted residency to foreign investors purchasing properties worth at least half a million euros, are also impacting the market.Purchases by foreign non-residents from outside the EU – the primary beneficiaries of the scheme – have decreased by 4.1%, while purchases by residents within Spain have increased.
Despite these shifts, British nationals remain the largest group of foreign buyers in Spain, followed by Moroccans and Germans. However, their influence, particularly on the islands, appears to be waning as price, location, and regulations become increasingly important factors.
The report concludes that the escalating costs raise questions about whether the market will eventually become more accessible to local home seekers, but the fact that even affluent foreign buyers are being priced out underscores the severity of the situation.
