The cost of buying and owning a property with real examples

Here is how much you can expect to pay when buying property, with the costs of owning property heavily depending on your desired level of service, use, and maintenance. At least, you will have a more or less idea of the average situation. The properties that are currently selling like hotcakes are rustic , have a well-sized plot and widespread views . So, if you are looking for such a property, be prepared to act fast! Inventory levels have increased a bit, but the good properties are selling very quickly (if priced well). Are you looking for a deal? Modern properties - built in 2000-2010 - are a little less in demand, especially if not turn-key. Look for the ones that are on the market for a while and see if you can make a good offer. A creative and business mind will be able to get so much value in return?

Will prices go up or down?

One advice , don't wait to buy (MAY-2024) because you are expecting prices to go down. Prices have been going up, up, up and we are expecting prices to move up more. Here is why:

1. The amount of people that can afford a house in Ibiza is increasing, and is expected to grow by 30% by the end of 2027 (Source: Knight Frank Wealth Report 2024)
2. Ibiza, being the size of 2 times Amsterdam or 1/3 of London is VERY small. It doesn't take much to pump up the heat in the property market.
3. The quality of service is getting better. To be honest, today the quality of service is nowhere near it should be, and still, people are attracted by the brand "Ibiza". The goal is not to get more people to the island, the short-term goal is to improve housing problems for locals and service providers.
4. Solutions for the "affordable housing problems" are on the horizon. This means, more policemen and overall a better service system. Imagine sharing a room with your colleagues and working 12 hours a day in the heat. For sure, this won't result in an extra smile for the paying customer. Several projects including rent control have been approved in and around Ibiza town to create a housing market that works for everyone.

I am mentioning this expected move in prices because we do see a lot of people waiting. A buyer cycle takes about 1-2 years counting from the first idea to buy something on the island, up to the signing at the notary. If you started exploring the market 2 years ago, you might find yourself in a spiral of constant disappointment. You might have friends who went through "buying property in Ibiza" before... They will know ;).

Need financing? Here is what you can expect...

Today, you will pay about 2,5-3,5% (MAY-2024: 3-3,5%) depending on the conditions and the duration of the mortgage. This is about double the rates from 2-3 years ago, but still below the 4-5% in the Netherlands or 6-8% in London… However, the general voice throughout Europe is that interest rates will start dropping when inflation starts to do so. Will that be in 3 months? In 6 months or in 1 year? The experts have varying opinions on this. For this reason, many buyers are opting now for the mixed mortgage option. When choosing a mixed mortgage rate, you will pay a fixed rate in the first years and after, you will pay a variable rate. This is specifically interesting in times when mortgage rates tend to be higher and you anticipate on lower rates in the unforeseeable future. When deciding on the price range of the property take into account that as a non-resident, you will be able to get a mortgage of 60-70%.

Besides local banks, I would really advise to go to a good mortgage broker, because there are so much possibilities of getting your home financed. Good mortgage brokers work internationally and follow financial markets for the best opportunities for their clients. Their partnerships can save you a lot in the long term. Note: Look for a mortgage broker that has a good track record and works internationally.