Sales prices and rents in the Andorran market continue to rise, pushed up by limited supply and persistent demand for high-end properties from foreign investors, which makes housing affordability a serious social and economic concern for local residents.

This extended overview from the Global Property Guide covers key aspects of Andorra's housing market and takes a closer look at its most recent developments and long-term trends.

Table of Contents

• Housing Market Snapshot
• Supply Highlights
• Demand Highlights
• Rental Market
• Mortgage Market
• Socio-Economic Context

Housing Market Snapshot

Residential property prices in Andorra continue to rise reaching historic highs. According to the Department of Statistics of the Government of Andorra (DS), as of Q3 2024, the average price of apartments across the country stood at EUR 4,170 (USD 4,594) per square meter, reflecting a 12.47% year-on-year increase (10.61% when adjusted for inflation). The broader residential pricing indicator reported, which includes flats, detached houses, and other residential dwellings, reached EUR 3,874 (USD 4,266) per square meter, marking a 12.16% annual increase or 10.29% in real terms.

Data Source: Department of Statistics.

Property prices vary significantly by location. A Q4 2024 report from property platform Pisos.ad identified Ordino as the parish with the highest average advertised prices for apartments, while Escaldes-Engordany recorded the highest per-square-meter prices. These two parishes also led the market for detached houses. "Projects in Ordino and Escaldes-Engordany stand out for their exclusivity and prime locations. For example, the La Querola project in Ordino averages EUR 9,369 per square meter, while Escaldes-Engordany maintains prices of up to EUR 9,395 per square meter in developments such as La Pleta Els Vilars," reported Diari d'Andorra, citing data from RID Analytics. More affordable properties, on the other hand, were concentrated in Encamp and Sant Julià de Lòria.

Average advertised sales prices by parish:

While price assessments vary depending on methodology - statistical office data reflects completed transactions, whereas agencies typically report advertised prices - analysts concur that Andorra's residential property market continues to set new records. However, Luis Alberto Fabra, director of the Real Estate Market Chair at the University of Zaragoza, cautioned that the current price levels are "far from market reality," citing a sustained decrease in residential sales transactions since late 2023 and growing affordability challenges for the local population.

Looking ahead, experts anticipate that the impact of weakening demand for for-sale properties will gradually stabilize price growth. Gerard Casellas, president of the Andorran Real Estate Agents Association (AGIA), noted: "The price adjustment process typically takes four to five quarters or about two years, and it now appears that we are in a phase of price containment, with a slight downward trend in activity."

Supply Highlights:

Supply Constraints and High-End-Focused Development Exacerbate Affordability Issues

Andorra's housing market remains constrained by limited land availability, leading to a persistent undersupply of residential properties. According to the latest available data from the DS, as of 2023, Andorra's housing stock stood at 43,641 dwellings (excluding tourist apartments), reflecting a marginal year-on-year increase of 1.18%. In addition to residences used as primary homes, 3,149 self-catering apartments were designated for tourist accommodation.

The distribution of housing stock varies across Andorra's parishes. Andorra la Vella, the nation's capital, holds the largest share (26%), with over 10,000 units, followed by Escaldes-Engordany with approximately 8,000 (18%). Encamp, La Massana, and Canillo each account for between 5,000 and 7,000 units, benefiting from a mix of residential and tourism-driven demand. Sant Julià de Lòria, with around 4,000 units, offers a quieter, suburban environment, while Ordino, the smallest contributor, has just over 2,000 units, characterized by low-density development and integration with natural surroundings.

Data Source: Department of Statistics.

Statistical data on new construction in Andorra is limited and not always up to date, lagging behind actual market conditions. Anecdotal evidence, as highlighted in a recent International Monetary Fund (IMF) report, suggests that recent housing developments have primarily focused on high-end properties, which remain unaffordable for much of the population. This trend has been driven by rising demand for luxury residences, including from foreign buyers, as well as escalating material and land costs, which incentivize developers to prioritize more profitable projects.

Efforts to promote public rental housing have been limited, with initiatives by the Andorran government and municipal authorities emerging only recently and at a modest scale. The Architects' Association of Catalonia notes that the lack of long-term governmental planning and land constraints have further exacerbated the issue. According to Jordi Marticella, President of the Association of Property Owners (APBI), the imbalance between supply and demand continues to sustain high property prices. "If demand persists while supply remains stagnant, prices inevitably rise - it is a simple equation," he stated.

Addressing housing affordability remains a key priority for the Andorran government. In recent years, the central administration has undertaken various transactions to acquire and repurpose multifamily buildings, hotels, and other structures for affordable rental housing. Approximately 300 affordable rental apartments are expected to be made available by the end of 2025 as part of this initiative, states the most recent Economic Report by the Andorran Chamber of Commerce.

Demand Highlights:

Purchasing Activity Slows Post-Peak as Prices Continue to Climb

Housing demand in Andorra has continued to cool, extending a trend that began in late 2023. The DS reported 293 residential transactions - including flats, detached houses, and buildings - completed during the third quarter of 2024, reflecting a 41.75% year-on-year drop. For the first three quarters of 2024, the cumulative decline was 29.12% compared to the same period in 2023. The total value of transactions fell by 25.29% year-on-year as of Q3 2024 and by 18.00% when comparing the first three quarters.

"2022 was an exceptional year, while 2023 already showed a slight decrease, and 2024 brings us back to reality with a marked drop in purchase and sale activity," said Luis Fabra, director of the Real Estate Market Chair at the University of Zaragoza, in his report on Andorra's real estate market for 2024, prepared in collaboration with the Andorran Real Estate Agents Association (AGIA). Gerard Casellas, president of AGIA, attributed the decline to the high cost of housing.

Data Source: Department of Statistics.

Andorra's real estate market continues to be shaped by sustained interest from affluent expatriates, where foreign investors play an increasingly prominent role. Although the official statistics does not provide a detailed breakdown of foreign transactions by property type, the overall impact of international buyers on the market is significant.

The latest annual data from the DS shows that 429 real estate applications from foreign investors were approved in the principality in 2023, representing a total value of nearly EUR 257 million (USD 280 million). While the number of foreign transactions fell by 14.2% year-on-year, the average transaction value rose sharply, increasing by 63.5% year-on-year to exceed EUR 598,000 (USD 652,358).

This decline in the number of transactions can largely be attributed to a temporary suspension of property purchase permits for foreigners, introduced on 5 September 2023, as a measure to combat escalating housing costs that have increasingly burdened local residents. Following this three-month suspension, the government implemented Law 3/2024, which imposes a progressive indirect tax on foreign property purchases.

While official figures on foreign real estate investment levels for 2024 are yet to be published, preliminary tax revenue data suggests that foreign investment remains resilient. Assessing the tax revenues collected since the implementation of the new tax, the Minister of the Presidency, Economy, Labor, and Housing, Conxita Marsol, acknowledged that the measure has not significantly deterred foreign investment, stating that it "hasn't slowed down much." With an initial revenue projection of EUR 5 million, actual collections have reached EUR 13.5 million. "We had not even budgeted half of it," noted Marsol. Revenue from this tax will be allocated to expanding the budget for rental and affordable housing initiatives.

Data Source: Department of Statistics.

Rental Market:

Affordability an Increasing Concern as Limited Supply Keeps Rents High

The social and economic issue of housing affordability in Andorra was further exacerbated in recent years when increased real estate prices and elevated interest rates, combined with tight qualification standards maintained by credit institutions, effectively priced out some potential buyers, creating additional demand among tenants and putting upward pressure on rental rates.

Throughout 2024, while easing from its peak, rental inflation in Andorra (measured by the annual change in actual rentals for housing component of the consumer price index) trended notably above the all-items inflation and was most recently reported by the DS at 4% in December 2024.

"Current salaries, combined with high rental prices, mean that many young people are getting used to living with their parents or even considering the possibility of leaving the country," noted Radio and Television of Andorra (RTVA) in their report on the matter in January 2025.

Data Source: Department of Statistics.

The research carried out by the Global Property Guide in January 2025 showed average residential rents in Andorra at EUR 1,450 (USD 1,519) for a 1-bedroom unit, EUR 2,100 (USD 2,201) for a 2-bedroom unit, EUR 2,600 (USD 2,725) for a 3-bedroom unit, and EUR 4,300 (USD 4,506) for larger properties with 4+ bedrooms. The corresponding gross rental yields averaged 5.83%, with stronger potential performance demonstrated by smaller 1-bedroom and 2-bedroom units.

According to the Q4 2024 report from the property platform Pisos.ad, the average apartment rent in Andorra reached EUR 2,833 (USD 2,969) per unit, with the average rent per sqm standing at EUR 20.89 (USD 21.89). At the same time, the average house rent was recorded at EUR 5,133 (USD 5,379) per unit, with the average rent per sqm standing at EUR 17.69 (USD 18.54). The highest average apartment rents, significantly above the Principality average, were reported in Escaldes-Engordany, while the most expensive parish in terms of house rent was Andorra la Vella.

Average rents by parish:

Overall, the rental segment of the residential property market remains particularly relevant for Andorra with its high share of foreign population and reliance on migrant workforce. As of 2023, 65.5% of households in the country were reported renting their residence, while only 19.9% lived in fully paid-off housing.

According to the IMF assessment, the persistent housing affordability issue in the country is directly related to this exceptionally high share of tenants, as housing affordability generally tends to be lower for renters than for owners. "The limited supply of housing due to the country's geography and the sustained demand for rental housing have pushed up rents, leading to the emergence of a housing affordability problem, especially among certain groups. The lack of affordable housing makes the labor market less attractive, especially for foreign and seasonal workers, and may affect foreign investment decisions for companies that cannot secure housing for their workers, thus limiting potential growth," said the IMF in their selected issues report on Andorra.

To improve the supply-demand balance in the sector, an ambitious set of government measures was announced by the authorities in April 2024, aiming to add 1,500 rental properties to the market within three years. The plan includes such initiatives as mandatory incorporation of vacant stock into the rental market, prohibition of new tourist housing licenses, a system of expiration and revocation for such permits previously granted, a limit on property purchases by non-residents, and revision of the immigration quota system to reduce demographic pressure.

The corresponding bill was approved by the government later in the year and is currently under review by Andorra's parliament.

Mortgage Market:

Lending Picks Up With Decrease in Interest Rates

Despite not having a national central bank or direct access to the European Central Bank (ECB) refinancing facilities, interest rates on loans offered by the banks operating in Andorra have been affected by the ECB monetary policy via the Euro Interbank Offered Rate (Euribor), after the country signed the Monetary Agreement with the EU in 2011 and adopted the euro as currency.

The ECB most recently announced a 25 bp cut in December 2024, bringing the interest rates on its deposit facility, main refinancing operations, and marginal lending facility to 3.00%, 3.15%, and 3.40%, respectively. Following the policy rates movement, the 12-month Euribor gradually climbed down from the 4% peak observed in the second half of 2023 and reached 2.44% in December 2024.

Data Sources: ECB, Department of Statistics.

Along with the general European trend, the average interest rate on mortgages in Andorra, reported by the DS, had previously increased from 1.21% in 2021 to 1.55% in 2022 and 3.48% in 2023. While the indicator is published by the authorities annually and no official figures for 2024 are available yet, the advertised offers by the local banks at the time of research demonstrate that the cost of borrowing in Andorra is likely past peak and on a downward trajectory similar to its European neighbors.

Minimum advertised interest rates on mortgages by selected banks in Andorra as of January 2025:

Improving lending conditions appears to be reviving the mortgage market in Andorra. After contracting in 2023 due to elevated interest rates and growing property prices, the volume of new residential mortgages granted picked up in H1 2024, according to the figures published by the DS. A total of 308 new residential mortgages were reported between January and June 2024, amounting to EUR 95.5 million (USD 102.8 million), which was 11.6% above the comparable 2023 period, although not quite yet reaching the H1 2022 benchmark of EUR 107.7 million (USD 113.8 million).

On the community level, in the previous two years, the parishes of Escaldes-Engordany and La Massana were notably ahead of other areas in terms of new residential lending. In the first six months of 2024, however, the largest share of new mortgages was granted in Andorra la Vella (20.4% of the total value), followed by Encamp (17.4%) and La Massana (16.7%).

By type of claimant, the vast majority of all mortgages (including residential and other categories) during this period were issued to Andorran nationals (97.3%) and only 2.7% to foreign nationals.

Data Source: Department of Statistics.

It should also be noted that the primary focus of the Andorran banking sector (after several mergers now comprised of only three institutions) is private banking - essentially individual lending and asset management solutions for high-net-worth (HNWI) and ultra-high-net-worth (UHNWI) clients.

In the meantime, the overall affordability of housing and accessibility of residential credit specifically remain among the pressing issues for Andorran citizens. "With housing prices increasing faster than the EU average and difficult access to credit, many Andorrans are crowded out of the housing market," pointed out a selected issues report from the IMF. "The high standards to qualify for a mortgage in the domestic financial market and high interest rates means that most of the population cannot access bank financing to become homeowners - affecting directly first-time home buyers and creating a disparity between wealthier residents able to borrow and the remaining of the population."

As one of the measures to address the issue, the Government of Andorra launched a program offering first-home buyers a guarantee of up to 20% of a required mortgage loan and a subsidy of between 15% and 35% of the interest.

Socio-Economic Context:

Services and Tourism-Driven Growth, Agreement with EU Pending

After a remarkable post-pandemic recovery, the Andorran economy returned to its lower long-term potential growth levels, comparable to the euro area average. Driven by the service sector and a record number of visitors, the country's real GDP growth in 2024 is estimated at 1.4%, with the IMF projections currently standing at 1.6% for 2025 and 1.5% for 2026.

Consumer Price Index (CPI) inflation in the country has been receding gradually from 6.2% in 2022 to 5.6% in 2023 and 3.6% in 2024. The most recent reporting from the DS shows the indicator at 2.6% in December 2024. The IMF forecast expects inflation in Andorra to further slow to 2.5% in 2025 and 2% in 2026.

Data Source: IMF.

Along with the active banking sector, the tourism industry plays a major role in Andorra's economy, especially during the winter season. In 2024, the DS data shows a 3% growth in the number of tourists, which reached a record high of 4.2 million people. The largest share of those, traditionally, consisted of Spanish (60.8%) and French (17.4%) nationals. The total number of overnight stays exceeded 12 million, registering 1.8% year-on-year growth. In addition to overnight tourists, the country welcomed 5.5 million same-day visitors (+3% year-on-year).

Based on the DS figures, tourists primarily stayed in hotels (57.6% of overnight stays), with friends or family (13.8%), and in dedicated tourist housing (10.7%). Among the Andorran parishes, tourists

preferred accommodation in Andorra la Vella (25.9%) and Escaldes-Engordany (23.1%).

Data Source: Department of Statistics.

In addition to significant international tourist traffic, Andorra maintains a high proportion of foreign residents. As of 2024, the Principality's total population stands at 87,097 inhabitants, of which only 45.3% are Andorran. Among the most represented foreign nationalities in the country are Spanish (23.8% of the total population), Portuguese (9.8%), French (4.4%), and Argentinian (3.6%).

The share of foreign workers among salaried employees in Andorra is also high. In 2024, 75.8% of employees working in the Principality were of foreign origin, the top countries of origin being Spain (33.0%), Portugal (13.8%), and Argentina (9.6%). Overall, the labor market in Andorra remains tight; however, the quarterly unemployment rate reported by the DS has climbed up marginally from 1.2% in Q3 2023 to 1.7% in Q3 2024.

Data Source: Department of Statistics.

In October 2024, Fitch Ratings affirmed Andorra's 'A-' standing with a stable outlook, citing the country's high GDP per capita and prudent fiscal policy that had helped preserve macro-stability despite external headwinds. At the same time, Andorra's economy remains small-sized and lacks diversification. The country's large banking sector exposes it to vulnerabilities in case of a severe adverse shock, Fitch notes.

In general, despite its features of a financially independent and wealthy micro-state, Andorra's large foreign population, significant migrant labor force, and reliance on the hospitality and tourism sector, the outlook for the Principality's economy is strongly tied to developments in neighboring countries and its relations with the European Union.

In 2024, Andorra's Government and the European Commission concluded the negotiations on the Association Agreement between the Principality and the EU that had been conducted since 2015. The main aim of the Agreement, which currently awaits approval from the European Council and consequent ratification by respective parties' parliaments, is to allow Andorra to participate in the EU's internal market and enhance cooperation in various policy areas.

Locally, the prospective ratification of the Agreement has already raised concerns among certain professional groups, namely real estate agents who fear that tighter integration into the European economic space will make domestic regulation of the real estate sector more difficult and attract to the Andorran market competition from other EU countries, leading to potential loss of business and jobs.

Sources:

1. Government of Andorra
   1. Mortgage Guarantee Program (CA): https://www.govern.ad/
   2. The Government Creates the Guarantee Program for the Purchase of a First Home… (CA): https://www.govern.ad/
   3. Ambitious Plan of Measures to Put Around 1,500 Rental Homes on the Market Within Three Years (CA): https://www.govern.ad/
   4. The Government Approves the Bill for Sustainable Growth and the Right to Housing (CA): https://www.govern.ad/
2. General Council of Andorra
   1. Bill for Sustainable Growth and the Right to Housing (CA): https://seu.consellgeneral.ad/
3. Department of Statistics of the Government of Andorra (DS)
   1. House Price Statistics: https://www.estadistica.ad/
   2. Statistics on Buildings, Year 2023: https://www.estadistica.ad/
   3. Real Estate Transactions Statistics, Third Quarter 2024: https://www.estadistica.ad/
   4. Foreign Direct Investment Statistics, Year 2023: https://www.estadistica.ad/
   5. Financial Sector Statistics: https://www.estadistica.ad/
   6. Mortgage Statistics, First Semester 2024: https://www.estadistica.ad/
   7. Consumer Price Index of Andorra, December 2024: https://www.estadistica.ad/
   8. Survey of Family Budgets, Year 2023: https://www.estadistica.ad/
   9. Labor Force Survey, Third Quarter 2024: https://www.estadistica.ad/
   10. Tourist Movement on Borders Survey, December 2024: https://www.estadistica.ad/
   11. Population Estimates, Year 2024: https://www.estadistica.ad/
   12. Statistics of Salaries, October 2024: https://www.estadistica.ad/
4. International Monetary Fund (IMF)
   1. Country Overview: Principality of Andorra: https://www.imf.org/
   2. IMF Staff Country Report: https://www.imf.org/
   3. Principality of Andorra: Selected Issues: https://www.elibrary.imf.org/
5. European Commission
   1. Commission Proposes Association Agreement with Andorra and San Marino to the Council: https://ec.europa.eu/
6. European Central Bank (ECB)
   1. Key ECB Interest Rates: https://www.ecb.europa.eu/
   2. Euribor 1-year, Monthly: https://data.ecb.europa.eu/
   3. US Dollar/Euro, Monthly: https://data.ecb.europa.eu/
7. Fitch Ratings
   1. Fitch Affirms Andorra at 'A-'; Outlook Stable: https://www.fitchratings.com/
8. Andorra Chamber of Commerce (CCIS)
   1. 2023 Economic Report: https://www.ccis.ad/
9. Official Gazette of the Principality of Andorra (BOPA)
   1. Law 3/2024, of February 1, on the Tax on Foreign Real Estate Investment in the Principality of Andorra (CA): https://www.bopa.ad/
10. Pisos.ad
    1. Andorran Residential Market, Quarterly Report (CA): https://pisos.ad/
11. MoraBank
    1. Mortgages: https://www.morabanc.ad/
12. Credit Andorra
    1. Mortgages: https://creand.ad/
13. The Architects' Association of Catalonia (COAC)
    1. Correspondent's Magazine: Sustainability and Housing in Andorra: https://www.arquitectes.cat/
14. Radio and Television of Andorra
    1. Young People in Andorra Concerned About the Rise in Rents (CA): https://www.andorradifusio.ad/
    2. European Freedoms of Establishment and Services Put the Real Estate Sector on Alert (CA): https://www.andorradifusio.ad/
15. El Periodic
    1. The Price per Square Meter of Apartments for Sale Reaches Historic Records (CA): https://elperiodic.ad/
    2. Marticella Criticized the Lack of Planning and Erroneous Policies in the Housing Crisis (CA): https://elperiodic.ad/
16. Diari d'Andorra
    1. Rising Rents and Stable New Housing (CA): https://www.diariandorra.ad/
    2. Tax on Foreign Real Estate Investment Exceeds 13 Million (CA): https://www.diariandorra.ad/
17. Altaveu
    1. The Price per Square Meter of Apartments for Sale is at Historic Highs (CA): https://www.altaveu.com/