Mallorca Property Market Forecast 2026: Prices, Trends, and Where to Invest

The Mallorca property market enters 2026 in a position that few would have predicted five years ago. Prices have risen for six consecutive years, foreign buyer activity remains robust despite geopolitical uncertainty, and the supply of available properties for sale has tightened to levels not seen in over a decade. But is this trajectory sustainable, or are there signs of a correction ahead?

This analysis examines the key factors shaping Mallorca's property market in 2026, drawing on the latest transaction data, listing trends, mortgage rate movements, and demographic shifts to provide a forward-looking assessment for buyers, sellers, and investors.

Where Prices Stand: The 2025 Baseline

Average property prices across Mallorca rose by approximately 8-12% in 2025, building on the 7-10% growth recorded in 2024. The pace of appreciation has been uneven across the island, with prime coastal areas and Palma's desirable neighbourhoods outpacing rural inland municipalities.

Current Average Prices by Area

Area	Average Price per sqm (2025)	YoY Change
Palma de Mallorca	4,200 - 5,800 euros	+10-14%
Calvia (Santa Ponsa, Portals)	4,500 - 7,000 euros	+8-12%
Andratx (Port d'Andratx)	5,500 - 9,000 euros	+6-10%
Soller	3,800 - 5,500 euros	+9-13%
Pollensa	3,500 - 5,000 euros	+8-11%
Manacor	2,200 - 3,200 euros	+10-15%
Llucmajor	2,800 - 4,000 euros	+9-12%
Inca / Binissalem	2,000 - 2,800 euros	+12-16%

The standout trend is the acceleration of prices in interior towns like Inca, Binissalem, and Manacor, where buyers priced out of the coast are finding better value. This "spillover effect" is likely to continue through 2026 as coastal affordability stretches further.

Supply: The Fundamental Constraint

The single most important factor driving Mallorca's property market in 2026 is lack of supply. The number of properties available for sale across the island has been declining steadily since 2021, and the current inventory represents roughly 4-5 months of sales at current transaction volumes -- well below the 8-12 months that characterises a balanced market.

Why Supply Is So Tight

• Limited land for development: Mallorca's strict planning regulations, environmental protections, and the 2018 moratorium on new tourist accommodation licences severely constrain new construction. The island cannot simply build its way out of a supply shortage.
• Owners reluctant to sell: Many foreign owners who bought at lower prices see no reason to sell. Their property is a lifestyle asset, not just a financial one. Those who do sell often reinvest in another Mallorcan property, creating churn without increasing net supply.
• Holiday rental restrictions: The Balearic Government's crackdown on unlicensed holiday rentals has not led to a flood of former rental properties hitting the sales market, as some predicted. Most owners have simply stopped renting and kept the property for personal use.
• New build pipeline is modest: Planning permissions for new residential developments in Mallorca are running at roughly half the level of mainland Spanish cities on a per-capita basis. Bureaucratic delays, environmental assessments, and infrastructure requirements mean that even approved projects take 3-5 years from permission to delivery.

New Build Pipeline in 2026

There are approximately 1,200-1,500 new residential units in various stages of planning or construction across Mallorca, expected to be delivered between 2026 and 2028. The majority are concentrated in:

• Palma (particularly the eastern expansion areas and Nou Llevant)
• Calvia (infill developments in Santa Ponsa and Sol de Mallorca)
• Marratxi (benefiting from Palma spillover)
• Llucmajor (new urbanisations near the coast)

These numbers are insufficient to meaningfully alleviate the supply shortage. New builds are overwhelmingly targeted at the premium segment (400,000+ euros), leaving the mid-market and entry-level segments even more constrained.

Demand: Foreign Buyers Remain the Engine

Foreign buyers account for approximately 35-40% of all property transactions in the Balearic Islands, one of the highest proportions in Spain. In prime areas like Andratx, Calvia, and Soller, the foreign share exceeds 50%.

Buyer Nationalities in 2025

Nationality	Share of Foreign Purchases	Trend
German	30-35%	Stable / slight increase
British	15-20%	Stable despite Brexit
Scandinavian (Sweden, Denmark, Norway)	8-12%	Increasing
French	5-8%	Increasing
Dutch	4-6%	Stable
Other (Swiss, Belgian, American, etc.)	15-20%	Mixed

The German market remains the dominant foreign buyer group, drawn by direct flight connections, an established expatriate community, and cultural familiarity with the island dating back decades. British buyers have proved more resilient than many expected post-Brexit -- the additional bureaucratic hurdles (NIE requirements, 90-day visa limits for non-residents, higher tax rates) have been an inconvenience rather than a deterrent for buyers with genuine intent.

The emerging trend for 2026 is growing interest from remote workers and digital nomads, particularly from Scandinavian countries. Spain's digital nomad visa (introduced in 2023) has made it easier for non-EU professionals to establish temporary residency, and Mallorca's quality of life, international schools, and reliable infrastructure make it an attractive base.

Interest Rates: The Headwind That Became a Tailwind

The European Central Bank (ECB) raised interest rates aggressively in 2022-2023 to combat inflation, pushing the main refinancing rate to 4.50% by September 2023. This cooled property markets across the eurozone, but Mallorca proved remarkably resilient -- prices barely paused before resuming their upward trajectory.

Since then, the ECB has begun easing, cutting rates progressively through 2024 and into 2025. As of early 2026, the main refinancing rate stands at approximately 2.50-2.75%, and markets expect a further 25-50 basis points of cuts during 2026.

What This Means for Mallorca Property

• Variable-rate mortgages (referenced to 12-month Euribor) are becoming cheaper, reducing monthly payments for existing borrowers and improving affordability for new buyers. Euribor has fallen from its 2023 peak of ~4.2% to approximately 2.3-2.5% in early 2026.
• Fixed-rate mortgages for non-residents are available at approximately 3.0-4.0%, down from peaks of 4.5-5.5% in late 2023. Spanish banks are competing more aggressively for mortgage business, particularly for higher-value properties.
• Purchasing power is increasing: a buyer who could afford a 400,000-euro property at 2023 rates can now borrow approximately 8-12% more at current rates, all other things being equal.

Falling rates are unambiguously positive for property demand. However, in Mallorca's case, the main constraint is supply rather than demand -- lower rates may simply fuel further price increases rather than significantly expanding transaction volumes.

The Regulatory Environment

Several regulatory developments are shaping the 2026 market:

Holiday Rental Restrictions

The Balearic Government continues to tighten controls on holiday rentals (alquiler turistico). The 2018 ban on new tourist rental licences for apartments in multi-family buildings remains in force, and enforcement of unlicensed rentals has intensified. For buyers, this means:

• Properties with an existing tourist licence command a premium of 15-25% over comparable properties without one
• The supply of licensable properties is fixed, making licensed rentals an appreciating asset class in their own right
• Long-term rental yields are lower but more stable, and the regulatory risk is minimal

The 100% Foreign Buyer Tax Proposal

In 2024-2025, there was political discussion at the national level about imposing additional taxes on non-EU buyers of Spanish property, with proposals ranging from higher transfer tax rates to a surcharge of up to 100% on purchases by non-EU nationals who do not intend to reside in Spain. As of early 2026, no such legislation has been enacted, and the proposals face significant constitutional and practical hurdles.

If implemented, such a tax would primarily affect non-EU buyers (including UK nationals) purchasing second homes. It would likely suppress demand from this group while redirecting capital to competing markets (Portugal, southern France, Greece, Croatia). For now, this remains a political talking point rather than an imminent policy reality, but it is worth monitoring.

Energy Efficiency Requirements

The EU Energy Performance of Buildings Directive is filtering through to Spanish law, with increasing requirements for energy efficiency in residential properties. Older properties with poor energy ratings (E, F, or G) may face pressure to upgrade, and buyers are increasingly factoring renovation costs into their offers. Properties with good energy ratings (A, B, or C) or those with solar installations and modern insulation are commanding growing premiums.

Area-by-Area Outlook for 2026

Palma de Mallorca: Continued Growth

Palma remains the engine of the Mallorcan market. The city centre, Santa Catalina, Son Espanyolet, and the Paseo Maritimo waterfront continue to attract strong demand from both residents and investors. Expect price growth of 8-10% in 2026, moderated slightly by affordability constraints at the upper end. The emerging neighbourhoods of Nou Llevant and Son Dameto offer better value and are seeing the fastest appreciation rates in the city.

Southwest Coast (Calvia, Andratx): Stabilising

The traditional premium belt of Santa Ponsa, Port d'Andratx, Bendinat, and Sol de Mallorca is showing signs of stabilisation after several years of aggressive growth. Prices in the ultra-prime segment (above 3 million euros) are plateauing as the buyer pool at this level is finite. However, the mid-market (500,000-1,500,000 euros) in these areas remains highly competitive. Expect 5-8% growth, with the strongest performance in the sub-1-million segment.

Northwest (Soller, Deia, Valldemossa): Supply-Constrained

The Tramuntana corridor from Soller through Deia to Valldemossa has almost no new supply and very low turnover. Properties here sell quickly when they come to market, often without broad advertising. Expect 7-10% growth, driven entirely by scarcity. The quality of properties available is mixed -- many fincas and village houses require significant renovation, which appeals to a specific buyer profile.

North (Pollensa, Alcudia): Steady Demand

Pollensa and Alcudia benefit from their established expatriate communities, excellent beaches, and a gentler pace of life. These areas have traditionally been popular with British buyers, and demand remains solid. Expect 7-9% growth. The port areas command premiums, while the old towns offer character properties at more accessible price points.

Interior (Inca, Binissalem, Sineu, Manacor): The Value Play

Interior Mallorca is the fastest-growing segment of the market in percentage terms, albeit from a lower base. Towns like Inca, Binissalem, Sineu, and Santa Maria del Cami are attracting buyers who want authenticity, space, and value. A renovated townhouse in Binissalem can be purchased for 300,000-450,000 euros -- a fraction of the cost of a comparable property on the coast. Expect 10-14% growth as the spillover effect from Palma and the coast continues.

East Coast (Artà, Capdepera, Santanyí): Emerging Interest

The east coast, traditionally quieter and less developed than the southwest, is seeing growing interest from buyers seeking unspoilt landscapes and lower density. Santanyi in particular has become fashionable, with its proximity to some of Mallorca's most beautiful calas. Expect 8-11% growth, with the strongest performance in the premium rural finca market.

Risks to the Outlook

No forecast is complete without acknowledging what could go wrong:

• A foreign buyer surcharge: If Spain implements a meaningful tax on non-EU property purchases, it would dampen demand from the most active buyer groups. This is the single biggest downside risk to the market.
• European recession: A significant economic downturn in Germany (Mallorca's largest source market) would reduce buyer activity. Germany's economy has been sluggish, though not recessionary, and a deeper downturn could cool the market.
• Overtourism backlash: Growing local resentment towards mass tourism and foreign property ownership could lead to more restrictive policies. Anti-tourism protests have become more visible in the Balearics, and political pressure on housing affordability for locals is increasing.
• Climate risk: Mallorca is vulnerable to water scarcity, extreme heat events, and rising sea levels over the longer term. While these are not immediate threats to 2026 valuations, they are increasingly factored into institutional investment decisions.
• Interest rate surprise: If the ECB pauses or reverses its easing cycle due to resurgent inflation, the tailwind from falling rates would dissipate.

Our Forecast for 2026

Taking all factors into account, our central expectation for the Mallorca property market in 2026 is:

Metric	2026 Forecast
Average price growth (island-wide)	+7-10%
Transaction volume	Stable to slightly up (+2-5%)
Foreign buyer share	35-40% (stable)
Average time to sell	2-4 months (well-priced properties)
Best-performing segment	Interior towns (10-14% growth)
Most supply-constrained area	Tramuntana (Soller, Deia, Valldemossa)

The overall picture is one of continued growth moderated by affordability constraints. The days of 15%+ annual gains in prime areas are likely behind us, but the structural supply shortage and persistent international demand make a meaningful price correction unlikely in 2026 absent a major external shock.

For buyers, the message is clear: waiting for a significant dip is a risky strategy. For sellers, market conditions remain favourable, particularly if your property is in a desirable location and competitively priced. For investors, the interior towns offer the best combination of value and growth potential, while licensed rental properties on the coast continue to deliver strong income yields.

What Is Your Mallorca Property Worth Right Now?

Whether you are a buyer trying to assess fair value, a seller timing your exit, or an owner curious about how your investment has performed, knowing the current market value of a property is the essential starting point. Our free valuation tool analyses thousands of real listings across every municipality in Mallorca to give you a data-driven estimate in under a minute.