Time to buy in Mallorca

Anyone looking to buy a holiday house on Mallorca could do better than to start looking now. A new report from one of the largest estate agencies on the island says that prices today are, in some areas, the same as they were 6 or 7 years ago.

According to Engel & Völkers, since the end of 2008 vendors have had to adjust their pricing strategy to sell in the current market and prices overall have reduced by an average of 15-30% depending on location. A two-bedroom apartment with views in Palma's attractive old quarter, where prices boomed until 2006/7, will now come to the market for around €450,000, a decrease of about 25%, whereas one without views will be around €300,000. Up in Pollensa, an area popular with British buyers, four bedroom villas have come down about 10% in value, with an average price today of €900,000.

The agency now believes that prices are unlikely to decrease further with interest in the market beginning to quicken. Daniel Chavarria Waschke explains: ‘The residential market here is stable and the Engel & Völkers offices are expecting serious buyers who want to invest in Mallorca over the coming months. So the prospects look good and we are cautiously optimistic for the rest of the year.'

Interest from overseas buyers tends to oscillate between British and German speaking and Scandinavian buyers, depending on the state of the economy in their home country. Even though the sterling/Euro exchange rate has improved for British buyers, they are still less numerous today than in previous years.

Note for buyers: New Spanish tax rates As of July 1 this year, the standard rate of VAT in Spain (known as IVA) rose to 18% from 16%; the reduced rate rose from 7% to 8%. Property buyers pay 1% stamp duty plus 18% IVA on purchases of building plots. Buyers of new developments or property, which are being sold for the first time, pay 1% stamp duty plus 8% IVA. For re-sales, the property transfer tax remains at 7%.