The Government of the Canary Islands has announced a new initiative to assist young residents in purchasing their first homes. Starting in early 2025, the Youth Mortgage Plan will provide a state-backed guarantee for 15% of the mortgage loans sought by residents aged 18 to 40.
This initiative is aimed at easing access to homeownership in a market where rising property prices have created significant barriers.
The programme is designed to support young buyers seeking to purchase their primary residence. One key condition is that the property must be priced at or below €200,000, a measure intended to ensure the plan benefits those purchasing modest homes.
Under the scheme, the Canary Islands Government will guarantee 15% of the loan, complementing the usual 80% financed by banks. This means that beneficiaries will only have to find a 5% deposit (plus closing costs), not the usual 20% deposit typically required by lenders, which is a huge stumbling block for first-time buyers.
Rising Property Prices in the Canary Islands
The plan comes in the context of a sharp increase in property prices. At the end of 2023, the average price of free-market housing in the Canary Islands rose by 7.5%, reaching €1,741 per square metre. This surge has made it increasingly difficult for younger residents to enter the property market without significant financial assistance.
Measures to Combat Housing Speculation
In response to concerns about speculation in the housing market, the Government has introduced measures to protect affordable housing. A notable step is the modification of housing laws to ensure that publicly protected housing retains its status permanently, curbing opportunities for speculative resale.
This year, 1,000 public housing units are being constructed by the Canary Islands Government, with plans to build another 1,000 next year. While acknowledging the insufficiency of these numbers relative to demand, the government described them as historic achievements for the region.
Socialist Party MP Patricia Hernández urged the Government to introduce additional measures to combat speculation, noting that 40% of property purchases in the Canary Islands are made by large-scale investors. She suggested a dual strategy of increasing public and protected housing stock while incentivising owners of vacant properties to bring them to market through fiscal benefits.
The Youth Mortgage Plan and broader housing initiatives reflect the Government’s efforts to address the housing affordability crisis in the Canary Islands. By supporting first-time buyers, increasing public housing construction, and implementing anti-speculation policies, the Government aims to alleviate housing pressures while fostering economic stability in the region.
