Why Buying or Renting a Home in the Balearics Is So Tough

What the Bank of Spain’s 2025 Report Shows

The Bank of Spain’s latest annual report highlights that the Balearic Islands have the hardest time for people trying to find a place to live in all of Spain.

Sky‑rocketing Prices

• From 2014 to 2025, the real price of homes (price after taking inflation out) rose 4.7 % each year.
• That growth is well above the national average and only beaten by Madrid.

Rent Keeps Climbing

• Rents went up 2.8 % per year, the biggest increase among all Spanish regions.

What This Means for Everyday People

Spending Too Much on Rent

• On average, a renter in the Balearics must put 30.8 % of their net income toward rent.
• Experts say spending more than 30 % of income on housing is already “excessive,” so many families are stretching their budgets thin.

Waiting Longer to Buy

• It takes about 13.3 years for a typical person to save enough for a first home in the Balearics.
• In the rest of Spain, the same goal is reached in roughly 6.8 years—almost half the time.

Why Are Prices and Rents Rising So Fast?

Demand from Outside Buyers and Tourists

• A big part of the demand comes from foreigners buying houses as second homes or for holiday rentals.
• Seasonal tourist rentals also soak up a lot of the available housing, leaving fewer units for year‑round residents.

Not Enough New Homes Being Built

• Across Spain, rules that limit new construction have kept the housing supply from growing fast enough.
• Over the past ten years, the number of new homes built has not kept up with the rising number of people wanting to live there.

Housing Stock Being Used for Other Purposes

• Many existing homes are now used as tourist accommodations, second homes, or short‑term lets.
• This reduces the number of houses that can actually be lived in permanently, especially in areas with lots of jobs and tourism like the Balearics.

The Bottom Line

The combination of high demand from investors and tourists, plus a shortage of new homes, has made both buying and renting in the Balearics a real challenge. Young people and families often spend a large chunk of their income on rent or wait over a decade to afford a purchase. Unless more homes are built for permanent residents and rules around short‑term rentals are adjusted, the housing squeeze is likely to stay tight.

Source

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