Property prices in Palma de Mallorca have increased by 187% over the past decade, while rental costs have risen by 145%, highlighting the growing housing affordability challenges facing the Balearic Islands.
According to a new report by Fundación Avanza and the Friedrich Ebert Foundation, residential property prices in Palma’s metropolitan area recorded the largest increase among the Spanish urban areas analysed between 2015 and the second quarter of 2026. Forbes España
The study reveals that purchasing a 75-square-metre property in Palma now requires the equivalent of 7.2 years of average household income, compared with just 4.8 years in 2015.
Rental affordability has also deteriorated significantly. In 2023, renting a 75-square-metre home accounted for approximately 32% of average household income in Palma, rising to 36% in surrounding areas.
The report identifies population growth, international tourism and limited developable land as major factors contributing to the region’s housing pressures. The Balearic Islands welcomed 15.7 million international tourists in 2025, compared with 10 million in 2000, while the resident population has increased by 42% over the same period.
These pressures are increasingly affecting local residents, particularly younger generations and workers in tourism-related industries, as property prices continue to outpace household purchasing power.
To address the growing imbalance, the report proposes expanding affordable housing development, improving urban planning and strengthening public housing investment.
Among its recommendations is a programme to construct between 1,000 and 1,500 public housing units annually across the Balearic Islands, alongside proposals to increase Spain’s social housing stock to 10% of total residential housing within 15 years.
The study estimates that achieving this national target would require approximately €20.3 billion in annual investment over 15 years, combining public funding, private capital and financing mechanisms.
For Spain’s real estate sector, the findings highlight the growing divide between strong property demand and local housing affordability. While rising prices reflect sustained interest in desirable Mediterranean locations, limited accessible housing could present longer-term challenges for residential development, workforce availability and economic growth.
As the Balearic Islands continue to attract international buyers and investors, the latest figures reinforce the importance of balancing property market growth with sustainable housing supply.
Source: Forbes Baleares, 11 November 2026, based on research by Fundación Avanza and the Friedrich Ebert Foundation. Forbes España
