Is there a housing shortage in the Balearic Islands?

According to the INE census, in 2021, the Balearic Islands had 652,123 homes; 68% were primary residences, 16% were second homes, and another 16% were unoccupied. That same year, there were 1,183,415 residents, which represents an average of 1.8 residents per dwelling. This means that a four-person household would need 7.2 homes in a hypothetical equal distribution. But despite these figures, to solve the housing emergency, a single formula is invoked, like a mantra, to rectify the situation: there is a housing shortage. Answer the question posed in the title of this article yourself.

In the Balearic case, two reasons are emphasized to explain the crisis: we are a limited territory and our economy is heavily reliant on tourism. This would imply that the tourism-based economy, on this limited territory, is a powerful draw for labor, residents, and tourists, increasing the population and the demand for more and more housing. To lower prices, the neoliberal approach proposes increasing supply, as if the housing market worked like the tomato market, where a large harvest leads to lower prices because tomatoes are a perishable product. As everyone knows, this is not the case with housing, which, even when built in large quantities, always increases in price. For neoliberals, these new homes should be sold at market prices; others would prefer subsidized housing, and there are also mixed proposals, but all of them aim to build more homes. Developers are eager to applaud. Let's talk.

First question: Limited territory for islands? It all depends on who we compare ourselves to and what variables we use. Prices in the Balearic Islands, similar to those in Corsica and Sardinia, are higher than those in Sicily. Corsica, Sardinia, and Sicily are all much larger and less "limited" than the Balearic Islands combined; however, the first two are less densely populated despite being just as expensive as the Balearic Islands, unlike Sicily, which is larger, denser, and cheaper. Malta is denser and more expensive than Menorca; the Cyclades are smaller than Menorca, have similar prices to Menorca, and are cheaper than Malta and the rest of the Balearic Islands. In short, the idea that "territorial limitations increase costs" is not based on any evidence.

Insularity vs. Isolation

The problem is that isolation is often confused with insularity. There are many situations and locations that are more limiting than insularity, such as certain mountainous areas or deserts. Moreover, islands are often magnets for tourism and maritime transport hubs, which have nothing to do with isolation. Compare passenger flows at the airports of Palma, Ibiza, or Tenerife with those of Valladolid or Ciudad Real, and you will clearly see the difference between insularity and isolation.

Second point: Tourism growth constantly requires more labor and, therefore, more people who will need housing. Okay, but the trigger for this process is not the arrival of immigrants, but the constant increase in real estate production and tourism promotion; in other words, it is driven by residential and tourism investment. Houses aren't built to accommodate the workers who come to build houses; they are built to be sold or rented to the highest bidder.

Urban planning that allows for higher densities and more square meters is based on this principle: increasing supply to attract demand. All policies aimed at increasing the supply of residential properties marketed on the open market, in territories as interconnected as ours, automatically become a magnet for people of all kinds. And since, in unregulated markets, investors seek short-term returns and prices are determined by buyers' ability to pay, the equation is complete: developers target the wealthiest clients, not those most in need. Until the bursting of the bubble in 2008, there had never been so much construction and housing prices had never risen so much, and now, there are areas of the Iberian Peninsula where the population is declining and housing prices are rising.

This policy of more and more, with its ups and downs, is the one followed in the Balearic Islands over the last few decades. That's why the GOB's old 'enough housing developments' campaign (1988) now alternates with 'enough tourism'. From no more concrete to, also, no more over-tourism, cars, overcrowding...

It has often been argued that urban planning is key to rectifying the housing situation. The minimum reserves of Social Housing (VPO) on developable land or urban land undergoing redevelopment are a step in that direction. Without dismissing the latter, it is now clear that these types of measures are insufficient if we maintain the tourism model or, more generally, the economic model. But here the big question arises: what model would we like to move towards? Without entering into this discussion, it can be admitted that a large part of the problem with our model, as it affects housing, is that it is based on the revaluation and increase in real estate prices, on the trap of buying a home in the expectation that, even as it ages, its price will continue to rise. “We don’t earn money all the time we work,” Verga said. In other words, for the players in our real estate model, speculation isn’t collateral damage; it’s the driving force.

Pushing aside Social Housing (VPO) in favor of more expensive Limited-Price Housing (HPL), building homes on land designated for public facilities, allocating less land for facilities, increasing density, or legalizing homes on rural land are measures that won’t get us anywhere. These actions encourage real estate transactions, attract more labor, more investors, and wealthy homebuyers who drive up prices.

Are more homes needed? Sources from certain academic circles, the Bank of Spain, developers, investment consultancies, and the GOIB (Government of the Balearic Islands) say yes, and they estimate the need at between 30,000 and 91,000. All this while there are 105,434 empty homes in the Balearic Islands.

We need to start thinking about limiting the appreciation of existing housing stock by capping prices, and not just rental prices—why not sales prices as well?—or consider purchasing or exercising the right of first refusal on properties held by large landlords in high-demand areas, as is beginning to be done in Catalonia. This would help improve access to housing. If expropriation is permitted for highways, military bases, or airports, why can't we consider price caps and the right of first refusal on sales by large landlords in high-demand areas?

Ultimately, building more homes at market prices (or under the euphemism of capped prices) aims to achieve short-term returns on investment with expectations of future appreciation. This is a motive that should be discouraged.