High demand for holiday rental accommodation and a lack of new housing stock is driving a rise in property prices on Lanzarote, according to the latest report relased by TINSA, Spain´s leading house valuation agency.

According to TINSA these two factors are fueling a sharp upswing in prices and this effect is especially prominent in Puerto del Carmen, where the most expensive homes have now hit the 3,500 euros per square metre mark. And is also reflected at the bottom end of the market too, where prices for decent entry level apartments now rarely fall much below 100,000 euros.

Currently, there are no plans in the pipeline to develop new properties in serious numbers in any of the island´s main resorts. Which means that property prices look set to carry on rising.

However, rising property prices on the island also come at a growing social cost. The long term rental market has evaporated, as owners opt for the more lucrative tourist rental market instead. Making it much harder for local residents to find affordable accommodation.

This in turn is creating a recruitment issue for local businesses - some of whom are now reporting that they are unable to fill vacancies as potential employees cannot find anywhere to live. Some areas and enclaves have also been 'hollowed out' - as tourist rentals erode the establishment of settled local communities.