This week the Spanish National Statistics Institute released figures confirming that the Balearic Islands of Mallorca, Menorca, Ibiza and Formentera are now called home by close to 24,000 Brits.

Sadly, despite the reputations of these idyllic islands, it’s not all about the party. The cost of living has been climbing gradually now for the last few years.

As is the case in most European countries, inflation has taken its toll while wages have stagnated. On top of these factors, a fall in the sterling to euro exchange rate has affected expats and Spain’s well documented economic trouble mean that banks are very reluctant to lend for both personal and professional borrowing.

The situation affecting the whole of Spain is magnified in the Balearics due to the fact that imported goods are more expensive and that the increasing popularity of the island is pushing prices up. This means that expats planning a move there are facing much higher costs than in previous years.

Sally Veal of the Spain Buying Guide explained: “In terms of price, the Balearics are now comparable to major cities like London and Paris. This means that when people come here to look at houses and plan their new lives here, they are faced with quite a nasty shock. Unfortunately, the Balearics are no longer a cheap destination”.

Many expat permanent residents in the Balearics opt to start their own businesses to make ends meet. However, they are faced with all of the problems associated with dealing with Balearic banks. In a recent poll it was revealed that 64 per cent of expats do not trust local banks at all. The major causes of concern were “unfair” charges on their Spanish accounts and language barriers.

However, it is not all doom and gloom. Sally was quick to mention “If you are offering the right product and service then the Balearics are great places to run businesses. I would recommend ensuring that you have good financial, legal and business advice and on top of that, the ability to speak Spanish is vital”.

For details of property for sale in the Balearic Islands or all property for sale in Spain, visit the listings on Rightmove Overseas. When every penny counts, it’s incredibly important to get the best rates when you are transferring money from a UK account to an account in the Balearics. Contact currency experts, Smart Currency Exchange via the Currency Zone to hear how they can save you money.

To understand the full step-by-step process to buying a property in Spain, collect The Overseas Guides Company’s ‘Spain Property Buying Guide’