Andorra Housing Crisis: €1M Averages, Rented-Out Affordable Flats Block Buyers

Andorra's housing market faces deepening affordability pressures, with average sale prices exceeding €1 million and sub-€400,000 listings—predominantly small studios or one-bedroom flats under 50 square metres—largely occupied by tenants under contracts running to 2026 or 2028.

A review of about 300 listings on major portals identified roughly 68 flats below €400,000 marketed with active rentals, restricting immediate access for buyers seeking primary residences. Tenancy details often appear only in fine print, demanding careful review. These properties concentrate in higher parishes, including Pas de la Casa in Encamp, and El Tarter and Soldeu in Canillo, with few options in central areas like Andorra la Vella, Escaldes-Engordany, or Sant Julià de Lòria. Examples include 30-square-metre units in Canillo's Forn district priced at €250,000. Listing prices averaged €6,190 per square metre on one portal, well above the €4,400 closing price cited in a recent Col·legi professional d’Agents i Gestors Immobiliaris (AGIA) analysis by academic Luis Alberto Fabra, reflecting seller expectations in a strained market.

Fabra attributes the crisis to a supply-demand mismatch, exacerbated by 2.3% population growth in one year from international appeal and local expansion. Urban planning rules promote oversized 200-square-metre homes unsuited to typical two-person households, which he says cannot deliver affordability without subdivision allowances on existing plots.

Rental market data from the Statistics Department underscores the challenges. Flats comprised 92.2% of resident households in 2024, with rentals accounting for 64.5% of primary homes—up to 25,317 units overall. The housing stock grew by 5,816 units from 2020 to 2024, including 1,105 added last year, but mostly rentals (4,121) over owner-occupied (1,695). Average rental rates rose 10.6% to €9.50 per square metre, reaching €13 for new tenancies amid an 11.4% jump. Most homes span 50-125 square metres, varying by parish: mid-sized in Canillo, larger in La Massana. Newer renters—those in place under a year—have more than doubled, while long-term ones (20+ years) declined.

Fabra warns of an "expulsion effect" as housing costs climb 13% yearly against 3% wage growth, sidelining local workers amid foreign buyer competition. He forecasts near-term price rises, then falling sales, listings, and closings. Remedies require government steps: public housing for the vulnerable, aid for others, tax breaks for owner-occupiers, higher levies on investors to fund stock, and better rental contract data amid deregulation talks. Without reforms, he cautions, homeownership remains daunting for Andorran workers.