BREXIT is contributing to an ‘alarming’ plummet in property sales to foreigners in the Balearics, experts have warned.
The number of homes sold to foreign buyers in the second quarter of 2023 fell by 28% year-on-year, latest figures from the Balearic Association of National and International Real Estate Agencies (ABINI) show.
That is the biggest drop out of all the regions in Spain, in what has been branded ‘worrying’ and ‘alarming’ by industry leaders, particularly as property sales account for 20% of the region’s annual GDP.
According to ABINI, it follows a considerable fall in the first quarter of this year, raising fears of downward trend ‘that does not favour the economy of the islands’, reports Ultima Hora.
Germany, Britain and the Nordic countries – in that order – are the most important clientelle for the Balearics’ property market.
But Germany, like much of Europe, is battling inflation and a cost of living crisis, causing budding buyers to hold off on purchasing their dream home in the sun.
Meanwhile Brexit has caused many Brits to re-think buying a home in Spain, given that they can only enjoy their Spanish getaways for three months at a time amid the tougher enforcement of the 90/180-day rule.
While a downward trend is emerging, sales to foreign buyers on the Balearics still account for 30.4% of all sales, an impressive figure beaten only by the Canary Islands (30.6%).
However local changes may also be playing a part, admits ABINI, including a recent increase on purchase and property taxes, which the organisation says are the highest in Spain.
The Property Transfer Tax, for example, is almost double of what buyers pay in Madrid.
ABINI claimed the Balearic Islands are facing “a scenario not seen in the last ten years”, warning that the community’s economy “will be harmed if this drop in sales continues.”
