Balearic Housing Prices Now Surpass the Property Bubble Record, New Government Data Shows
In short: house prices in the Balearics reached €3,980/m² in the second quarter of 2026, up 13.1% year-on-year, now surpassing the levels recorded at the peak of the property bubble. The Balearics are now the second most expensive Spanish region to buy in, behind only Madrid.
The figure that changes everything: we’ve overtaken the bubble
Spain’s Ministry of Housing and Urban Agenda confirmed, in data published on 17 September 2026, that the average house price in the Balearics reached €3,980/m² in the second quarter of the year. That’s a 13.1% year-on-year rise, and a 2.4% quarter-on-quarter rise.
The relevant point isn’t just the number itself, but what it represents: the Balearics have now strung together six consecutive quarters above €2,000/m², and according to the Ministry’s own records, current prices now exceed those reached at the height of the mid-2000s property bubble.
Spain by region: the Balearics take silver
With this figure, the Balearics are confirmed as the second most expensive Spanish region to buy a home in, behind only Madrid:
| Region | Average price (€/m²) |
|---|---|
| Madrid | €4,089.6 |
| Balearic Islands | €3,980 |
| Basque Country | €3,102 |
| Catalonia | €2,753 |
| National average | €2,355 |
In other words, buying in the Balearics today costs 69% more than the Spanish average, and the gap with Madrid — the only region still ahead — has been narrowing over recent quarters.
By type, homes under 5 years old sit at €2,736.6/m² (+12.1% year-on-year), homes over 5 years old at €2,342.5/m² (+12.5%), and protected/subsidised housing — the only segment staying relatively contained — at €1,247/m² (+5%).
Why prices are rising so fast: a 17,000-home deficit
On the same day, the Balearic Housing Observatory published the structural analysis behind this surge: between 2000 and 2025, the Balearic population grew by 46.3%, while housing stock only grew by 31.5%. That 14.8-point gap adds up to an accumulated deficit of 17,000 homes relative to what would have been needed to keep pace with population growth.
If you want the detail on how that deficit splits between foreign and resident buyers, and how much each pays on average, we cover it with concrete figures in our article on why foreigners pay almost double what residents pay for housing in the Balearics.
Construction is at its highest since 2008 — but it’s not enough
It’s not that nothing is being built: in 2025, 2,452 permits for multi-family housing were granted, up 18.6% on 2024 and the highest figure since 2008. The problem is that this pace of construction, even at its best in 17 years, still isn’t catching up with population growth, which has been outpacing supply for a quarter of a century.
What the regional government is proposing: 10,000 affordable homes
Facing this picture, the Balearic government (Govern) has a plan on the table to bring just over 10,000 affordable homes to market, split across three channels:
- Around 4,400 homes through Housing Law 3/2024 and affordable-rental programmes.
- Around 1,800 public homes managed by IBAVI (the Balearic Housing Institute).
- Around 4,000 homes through strategic residential projects (PRE).
Even if fully delivered, this plan would only cover a little over half of the estimated 17,000-home deficit, and its full rollout is spread over several years.
This isn’t a speculative bubble that can deflate overnight — it’s a sustained rise driven by a structural imbalance between population and housing that has been building for 25 years. That makes a sharp short-term price correction unlikely.
Is this the ceiling, or just the beginning?
The comparison with the mid-2000s bubble makes for a striking headline, but it’s worth qualifying: that rise was largely fuelled by easy credit and short-term speculation, whereas today’s is underpinned by real demand (from both residents and foreign buyers) running up against a supply that structurally can’t grow at the same pace, given how little developable land remains on the islands. That doesn’t guarantee prices will keep rising indefinitely, but it does explain why experts aren’t forecasting a significant drop in the short or medium term.
What this means if you’re thinking of buying now
If you’re weighing up buying in Mallorca in the coming months, this data points to some practical conclusions:
- Waiting for prices “to come down” has a real opportunity cost. With six straight quarters of rises and a structural deficit underneath it all, there’s no sign of an imminent correction.
- Newer homes are appreciating faster (+12.1% year-on-year) than protected housing (+5%), so the segment you buy in strongly shapes your exposure to further price rises.
- The Govern’s affordable-housing plan isn’t aimed at foreign second-home buyers, but at residents — don’t expect it to expand the supply available to you any time soon.
- Comparing the advertised price against the actual closing price still matters before deciding, given the average overpricing currently seen on property portals.
If you’re also concerned about how a future restriction on second-home purchases could affect you, we’d also recommend our article on the EU proposal to restrict second-home purchases, which is still under negotiation.
In summary
The Balearics have entered uncharted territory: prices above the old bubble peak, the second most expensive region in Spain, and a housing deficit that no current plan fully solves. For anyone thinking of buying in Mallorca, the practical reading is clear: the market shows no sign of cooling, so the decision to buy should be based on up-to-date data, not on the hope of a price drop that, for now, no indicator supports.