The Unaffordability of Limited-Price Homes in the Balearic Islands Revealed by Economist Eduardo Robsy

«The maximum prices of these homes they are not affordable for a double reason. If we go to the maximum prices of VPOs and apply what the decree law allows, with a price increase of up to 30 percent, if we want a home in a class A municipality [44 en toda Balears] and with an energy label also class A, housing at a limited price is going 3,500 euros per square meter. The average price of appraisals in the Balearic Islands on June 30, 2023 is 2,870 euros per square meter. It is 22 percent above the appraisal price of free housing in the Balearic Islands.

For Robsy the key is in the purchasing power of the majority of the islanders. «If we put it in relation to the real income of Balearic families, it is complicated. A limited price two-bedroom apartment would cost 280.000 euros. Without parking or storage room. Robsy warns that “with this price, as they will be new apartments, we must add a 10 percent VATso we’re going 308.000 euros. Leaving aside notary fees, a buyer will need to have saved 84,000 euros. The expert then calculates the monthly cost: «With a 25-year mortgage and a competitively priced interest rate of 4.7 percent, the payment would be 1,270 euros per month. the same apartment for rentwith these maximum prices, would reach 1.050».

The economist warns that since these are newly built buildings, “the new technical code forces you to build in energy class A or B.” In this way, “if the average salary of a citizen of the Balearic Islands is 24.000 eurosthe rent represents the 52 percent of the gross salary of the islanders. In the case of the mortgage, these measures that are supposed to be aimed at young people, I see it as a bit complicated for them to be able to raise 84,000 euros. But without being young, too.

Robsy warns that “the concept of affordable that the Government applies is an affordable one that does not fit with the common citizens of the Balearic Islands. The urban planning measures taken are speculative and opens the door to things that should not be legalized.