The Balearic regional government has set up a working group to look at the options available to reduce the number of foreign buyers of holiday homes on the islands.

Rents are high, house prices are even higher, and social housing barely exists, so it’s hardly surprising that housing access has become a political hot-potato in the Balearics, where the physical reality of islands coupled, with a dysfunctional planning system, mean that building land is scarce. Some local politicians point the finger of blame at foreigners buying holiday-homes on the archipelago.

Locals grumble they can’t afford to buy or rent homes on the islands where the average home costs 16.8 years of average salary (compared to a national average of 7.8 years, and 9 in Madrid), and house prices rose 19% last year (and 23% year-on-year in January), according to the Spanish notaries’ association, and 10% according to the National Institute of Statistics. Given that foreign buyers were responsible for 39% of all property purchases in the region in the last quarter of 2021, housing activists argue that wealthy foreigners buying holiday-homes on the islands are to blame for driving up prices across the board.

This problem has been bubbling away for a long time, but this is the first time the regional authority has taken the step of singling out foreign buyers for special treatment. In response to a parliamentary motion by Minorca’s eco-left political party Més per Menorca the Balearic government has agreed to set up a working group to study measures to limit the access of foreign buyers to the region’s housing market. The group has one year to report its findings.

“It’s not about restricting foreigners from the housing market, it’s about avoiding primary housing being bought by second-home owners,” says Josep Castells, the spokesman of Més per Menorca in the regional parliament. “There’s no element of xenophobia. The problem is there are too many holiday homes that perpetuate the problems of access to primary housing in the Balearics.”

Critics of the move say the housing problem is caused by a planning system and policies that restrict the supply of affordable housing, whilst pointing out that foreign buyers contribute handsomely to the local economy.

Excluding buyers from other EU countries could also be illegal. “It’s absolutely clear,” says Hans Lenz, a director of Engel & Völkers in Mallorca, and president of the Balearic National and International Property Association ABINI . “It would contravene European law, the free circulation of goods and capital, and would discriminate against EU members.”

The regional minister for housing and architecture Eduardo Robsy concedes that “the European Commission will have the last word.” In which case, the idea of excluding buyers from other EU countries has little chance of success.