Will 2024 be a good year to buy a house in Menorca?
Explore the real estate market projections in Menorca for the year 2024: Will housing prices vary? Will mortgages become more affordable? Is it a good time to buy or invest in property on the island? Join us in this brief analysis that will provide you with the information you need to make decisions about the future of real estate in Menorca!
We just bid farewell to a year, 2023, in which the fever to become a homeowner in Menorca experienced a slight softening, leading to declines in property transactions and mortgage contracting. Several factors have contributed to this slowdown in the market (limited supply, high interest rates, etc.), although these adjustments should be seen more as a return to normalcy than a market rupture on the island.
With the arrival of 2024, many wonder if their dreams of becoming homeowners in Menorca will finally come true. Beyond housing prices and loans to finance their acquisition, what truly makes a difference is the personal financial situation of each buyer. Job stability and previous savings are key factors. However, it will also be crucial to distinguish between transactions motivated by primary residence and those oriented towards investment. We face a year where economic uncertainty will persist, but we will seek to address the most relevant uncertainties and how they may affect the market on the island.
Will housing prices in Menorca decrease in 2024?
Undoubtedly the million-dollar question to which no one has a guaranteed answer. If we take 2023 as a reference, everyone believed that housing prices would fall, but this has not happened for various reasons: an increasingly limited supply, foreign buyers with high purchasing power, etc. Price and sales volume forecasts for 2024 will continue to be conditioned by:
- A continuing scarce supply: Inventory below expectations prolongs price stability. The imbalance between supply and demand tightens the market, making it difficult to see significant price drops given this situation. However, we believe that each personal situation will force the owner to respond differently, and therefore, interesting opportunities to acquire a property on the island can still be found. An increase in the number of residential developments and the liberalization of land could address these structural problems.
- Areas of interest: In the island, dynamic towns like Ciutadella, Es Mercadal, and Mahón, as well as some popular coastal developments, are safe bets due to the tourist appeal they offer and the high purchasing power of foreign clients looking to buy a property there. Unfortunately, this leaves few affordable opportunities for local residents in these locations, and therefore, they will have to look for alternative areas or adjust their expectations. In this regard, the local market must be patient and wait for opportunities, which are becoming less frequent.
- Housing typology: The construction of new housing continues to suffer from cost increases due to the war conflict and the international macroeconomic situation. Although many of these costs have returned to acceptable levels, this delay in projects that were supposed to be released in 2024 will also limit price declines. As 2024 progresses, this situation will improve. Regarding second-hand housing, control over the annual rent price increase favors the transition to sales. However, tenants of rental properties on the island are reluctant to leave due to the lack of available alternatives at a better price.
And mortgages, will they be cheaper in 2024?
It is the great hope of those aiming to acquire a property in Menorca in 2024 and need financing. Since inflation skyrocketed, increases in interest rates have been constant until the latest updates. The average rate at which Spanish entities granted mortgage loans stood at 4.276% last November, the first month-to-month decrease since February 2022. It seems that this monetary policy is starting to bear fruit, and its effects are expected to consolidate throughout 2024. Mortgage offerings will be modified in this regard, and growth in mixed or hybrid mortgages is expected due to their lower risk. Without a doubt, a smart solution in these times when certainties are so volatile and will continue to be the most contracted mortgage in 2024.
Therefore, will it still be a good idea to invest in property in Menorca during 2024?
In general, investing in property will continue to be an interesting strategy given the long-term security that real estate offers.
And in the case of Menorca, will it be a good time to invest in property? In summary, Menorca is a steadily rising value. While conditions and the international context may not be the best, it will still be more interesting to invest on the island than in other more volatile destinations. For the small investor or even the local buyer looking to invest their savings, the answer goes in the same direction: if there is a certain confidence in terms of economic solvency and a stable personal and professional situation, yes, it will still be interesting to use real estate as an investment or even to exit the rental market given the improvements in mortgage conditions that will appear throughout the year.
If you would like us to analyze your specific case and provide real estate advice for purchasing a property on the island, whether as a primary residence or an investment, do not hesitate to contact us, and we will accompany you along the way.
