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Prices continue to fall for new housing in Palma de Mallorca

featured in News & reviews Author Nicola Henderson, Site Editor Updated

The latest report from the Evaluation Society of Spain has found that the cost of new housing in Palma has fallen by 4.6% during 2010. A square metre of real estate in Majorca's capital city will set you back €2,176, which despite the decrease is still the most expensive place in Mallorca to buy property. This price is still lower than the Spanish national average, which is €2,476 per square meter.

New apartments in Calvia now cost €2,062 per square metre - down 2.1%, but Manacor has bucked the trend by having achieved an increase of 0.6%, to €1,559 per square metre.

The reduction in prices reflects the large number of properties on the market, both new stock and properties that have been repossessed by banking institutions as a result of the credit crunch. The Bulletin of New Housing Market 2010 also predicts that prices are unlikely to recover until the second half of 2011 when the supply issue should be rectified.

In addition, builders and property developers will be facing higher financial costs this year and prospective buyers will no longer benefit from tax incentives, both of which will contribute to the uncertain future of the housing market.