San Sebastián or Mallorca for a family holiday?

What time of year are you going? San Sebastian is more temperate than other areas of Spain and with the coast being on the Atlantic there are better beaches depending on what you want from a beach. San Sebastian is highly regarded for its gastronomy and if you're foodies then it's a superb destination.

Mallorca has better beaches and better hiking. The Tramuntana mountains are a Unesco World Heritage Site and offer superb hiking opportunities with some fantastic mountain towns and villages to explore. The capital, Palma, is very lively and has a wealth of interesting sights as well as fantastic food.

Personally I would opt for Mallorca but I'm very biased as it's my favourite part of Spain.

Malaga is well worth a visit however I feel your itinerary is too rushed.

Donostia-San Sebastian is not a beach resort, but a working city with three beautiful beaches, and it´s on the Atlantic coast, quite rainy and green with lots of forests, deep valleys and mountains. Wonderful landscapes, wonderful hikes, wonderful food...but beach weather is not always an option.

I agree that beautiful San Sebastian is not a reliable destination for those seeking beach weather. The few people I saw in the water in June 2016 were wearing wetsuits.

There are two trains a day from Madrid to San Sebstian that take less than 5 hours and one that'sjus over 5 hours. For me that would be more pleasant than heading back to the airport just five days after you land in Spain. You might have sever luggage-size and-weight restrictions (or substatial baggage fees) if you fly.

Three nights is way short for Seville. I'd drop Malaga (though it is interesting) in order to allow for a better visit to Seville.

I think you may be disappointed in the Algarve unless you're looking for British pubs and German sausage joints. If I were traveling from Australia and had only one month for Spain and Portugal, my itinerary wouldn't include the Algarve. At the least, you'll need to select your home base carefully. There are folks here who can help you with that.

Instead of Málaga, I would suggest Córdoba for 1 night, and +1 night in Seville. Or Córdoba for 2 nights, and keep Seville as-is. As you wish.
There is nothing wrong at all with Málaga, but I think that Córdoba vastly outshines Málaga for most tourists.

As for Mallorca vs. Donostia (S. Sebastián): as much as I love Euskadi (Basque country), and even though I am not too familiar with Mallorca (only second-hand knowledge from friends & family), I do think that Mallorca has the edge given your interests. Logistics will be easier too, because I believe that there are direct flights from Palma to Granada.

And while there is more to the Algarve than British pubs (this only really applies to the resort areas), I do agree that coming all the way from beach-blessed Australia to visit the Algarve is perhaps not the best use of limited time. The broad area between Lisbon and Porto has more to offer, overall.
The downside of skipping Algarve is that you would most likely need to fly (or arrange a driver, could be cost effective if you fill up a car!) from Seville to Lisbon, instead of taking a bus from Seville to the likes of Tavira.

Thank you very much for the responses so far. Yes balso you are correct there is a direct flight from Mallorca to Granada which would be very useful. I think I have been convinced to add a night or 2 in Córdoba, it looks great.
So you guys think 3 nights in Seville won't be enough? Add an extra night? But 3 nights in Granada is enough?
Yes if I don’t do the Algarve, we would probably need to fly from Seville to Lisbon, whereas going to the Algarve would split up the train trip. However, it will also take up around 4 more nights so if you don’t think the Algarve is worth it, we might be able to put those days towards something else. Is there anywhere else in Portugal you would recommend instead? Somewhere like Peniche or Ericeira?

Also just to note we know we won't be able to see absolutely everything and can't stay super long in each place but for this trip are happy to just get a taste of Spain and Portugal because we will definitely be coming back!

Why go to the beach in Europe, frankly beaches in the USA and Caribbean are better?

2 nights in Granada is enough, San Sebastian and the Basque country is wonderful.

Seville is fantastic. From Madrid, do a day trip to Toledo and another to Segovia.
Lisbon is great, and so is Porto. Take the train up the magnificent Douro River Valley or take a cruise.

I think 3 nights is very nice in Granada. The Alhambra is not its only sight, and it is possible to spend a large chunk of a day at the Alhambra. With only two nights you might be there less than 1-1/2 days, which I think would be rushed. However, I wouldn't claim 2 nights in Granada is a disaster.

Seville is much larger than Granada--about 3 times it's size. It has a lot of sights, and they are fairly scattered.

I agree that Cordoba is great.

Why go to the beach in Europe, frankly beaches in the USA and Caribbean are better?

Are they? In what way?

I've been to beaches from Atlantic City all the way down to Miami and whilst most were pleasant enough none were spectacular. Even the beaches I visited in Barbados weren't a patch on what I've experienced in a number of Mediterranean islands.

Personally I find long stretches of sand backing onto miles of condo's, resorts and the plethora of beachfront vendors to be a poor substitute for a secluded cove surrounded by pine clad cliffs or a remote sweeping bay overlooked by castle ruins.

If you're not convinced then these might provide some inspiration: https://www.europeanbestdestinations.com/best-beaches-in-europe-2022/