Andorra's Residential Property Market Analysis 2026

Due to structurally limited supply, sales prices and rents in the Andorran housing market remain under strong upward pressure, making affordability a serious social and economic concern and prompting the government to attempt a market reset through regulatory measures.

This extended overview from 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 2025, the average price of apartments across the country stood at EUR 4,440 (USD 5,209) per square meter, reflecting a 6.48% year-on-year increase (3.59% when adjusted for inflation). The broader residential price indicator, which includes flats, detached houses, and other residential dwellings, reached EUR 4,373 (USD 5,131) per square meter, marking a 12.90% annual increase, or 9.84% in real terms.

Andorra's house price annual change:

The latest report by the property platform Pisos.ad shows even stronger growth on the advertised side of the market. As of Q3 2025, the average advertised price of apartments reached EUR 895,970 (USD 1,051,152), a 33.87% year-on-year increase, while the median apartment price stood at EUR 695,000 (USD 815,374), up by 26.46% over the same period. In the houses segment, the average asking price rose by 8.07% to EUR 2,451,382 (USD 2,875,961), and the median price increased by 16.67% to EUR 1,750,000 (USD 2,053,100).

Advertised prices vary significantly by parish, with Ordino and Escaldes-Engordany traditionally occupying the upper end of the spectrum, characterized by a large proportion of exclusive high-end properties in prime locations.

Average advertised sales prices by parish:

While price assessments differ depending on methodology, with statistical office data capturing completed transactions and agencies typically reporting advertised prices, analysts concur that Andorra's residential property market continues to set new records. Looking ahead, market experts suggest that residential prices are likely to remain under upward pressure in the short term, while cautioning that this pace of growth cannot be sustained indefinitely. Luis Alberto Fabra, director of the Real Estate Market Chair at the University of Zaragoza and adviser to the Andorran Association of Real Estate Agents and Property Managers (AGIA), stresses that "the increase in house prices is not sustainable in the long term <…> prices will not fall immediately, they will begin to stabilize".

Local brokerage commentary reinforces this view by emphasizing how structural supply constraints are shaping the outlook. Josh Palau of Labb Properties describes the market as "notably tense", noting that "the limited supply is far from covering the strong demand <…> prices can still surprise us to the upside" and estimating that it will take around one and a half to two years for new projects currently in the pipeline to reach the market. This combination of strong demand, very low available stock, and a 1.5-2-year supply lag suggests that price tensions are likely to persist into 2026, even if the most acute phase of acceleration gradually gives way to a period of stabilization rather than a sharp correction.

Supply Highlights:

Concentrated Stock, High-End Pipeline, and Emerging Public Intervention

Andorra's housing market is constrained by very limited land availability, resulting in 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). In addition to residences used as primary homes, 3,149 self-catering apartments were designated for tourist accommodation.

The distribution of housing stock varies significantly 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 units (18%). Encamp, La Massana, and Canillo each account for between 5,000 and 7,000 units, supported by a combination of residential and tourism-driven demand. Sant Julià de Lòria, with around 4,000 units, offers a quieter, more suburban environment, while Ordino, the smallest contributor with just over 2,000 units, is characterized by low-density development and close integration with natural surroundings.

Data Source: Department of Statistics.

Statistical data on new construction in Andorra is limited and not always up to date, often 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 pattern has been driven by rising demand for luxury residences, including from foreign buyers, as well as escalating material and land costs, which encourage developers to prioritize more profitable projects.

"Developers, legitimately focused on profit, concentrate their efforts in areas with higher returns, while parishes with less speculative appeal become second-tier spaces. The result is an unbalanced market, with concentrated luxury and a periphery absorbing the residential needs of the majority," commented Augé Holding Group.

Since 2022, Andorra has introduced a series of measures to expand affordable rental supply and curb speculative pressures. The Government has created a program to buy or lease unused buildings and convert them into public affordable rentals, with the explicit objective of "creating a public housing stock at affordable prices". This has been complemented by new-build public projects on municipal land, notably Borda Nova I and II in Andorra la Vella and the Cedre building in Santa Coloma, where land is ceded by the comú (local municipality, under a long-term use agreement) and the State finances construction. Together with similar agreements in Escaldes-Engordany, La Massana, Encamp, and Sant Julià, these schemes are intended to increase the public affordable-rental stock to around 500 units by 2027.

In parallel, the Government is rolling out public-private incentives for affordable rentals. A 2025 program offers advantageous financing, exemptions from construction-related taxes and corporate tax on income from affordable rents, and a 0% planning cash contribution for projects that deliver units at below-market, regulated rents, with the option to combine housing and coliving.

Demand Highlights:

Regulatory Shift Underpins Short-Term Spike in Transactions

After a gradual cooling in 2023-2024, housing demand in Andorra rebounded markedly in 2025. The DS reported 1,630 residential transactions, including flats, detached houses, and buildings, completed during the first three quarters of the year, reflecting an 86.50% year-on-year surge. This abrupt market turnaround appears closely tied to regulatory changes targeting foreign participation, a segment that has historically accounted for a significant share of home buyers.

Data Source: Department of Statistics.

In March 2025, the Andorran Parliament approved Llei 5/2025 (Omnibus Law). The law, which entered into force in April 2025, introduced strict limits on the number and types of properties foreign investors may acquire, generally prohibited foreign-financed developments for sale, refined the definition of "foreign investor," and strengthened tax and anti-speculation measures - all intended to curb speculative demand and improve access to housing for local residents.

One of the key elements of the legislation is its transitional regime for foreign purchase files already in progress. Foreign real-estate investment applications that would exceed the new caps set out in Article 9 may, for a period of six months from the law's entry into force, still be assessed under the previous rules if the applicant can reliably demonstrate that, prior to the law taking effect, there was a contractual agreement for the purchase and an associated financial transaction between the parties. In practice, this transitional window implies that part of the transactions recorded in 2025 likely reflects pre-law commitments being finalized under the old framework, helping to explain the high level of activity even after the new restrictions formally took effect.

Main Clauses of the Omnibus Law (2025):

Local professional commentary suggests that the Omnibus Law is viewed both as a structural reset of Andorra's housing model and as a potential brake on market activity. Legal and tax advisors emphasize the policy intent: Augé Holding Group notes that the law "introduces significant changes in key areas such as foreign investment and the housing crisis," with the explicit goal of ensuring access to dignified, affordable housing while promoting sustainable demographic and territorial growth. Other commentators characterize the package as a deliberate attempt to curb speculative acquisitions and reorient foreign capital towards long-term, socially useful projects, rather than to shut the door on foreign investors altogether.

By contrast, sector bodies representing agents, developers, and owners warn about downside risks: the real estate association AGIA has cautioned that the Omnibus Law could provoke a "crisis" in the construction and property sector by reducing legal certainty and private investment, with knock-on effects on employment and activity. The Real Estate Owners' Association (APBI) similarly argues that limiting foreign participation in development risks "cooling" the broader economy and eventually depressing prices without necessarily resolving access issues for new housing market entrants.

Rental Market:

Rental Inflation Accelerates, Government Considers Regulations

The rental segment of the residential property market remains particularly relevant for Andorra, with its high share of foreign population and reliance on a migrant workforce. As of 2024, 64.9% of households in the country were reported renting their residence, while only 21.1% lived in fully paid-off housing.

Andorra's rent price index:

According to the IMF assessment, the country's persistent housing affordability issue is directly related to the 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," said the selected issues report on Andorra in 2024.

The structural scarcity of available housing and consistently high demand were 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.

The measures previously adopted by authorities to protect existing tenants (such as the lease freeze until 2027) have also led to further shrinking of available rental supply. According to Gerard Caselles, the president of AGIA, many property owners now decide not to put new homes on the market or to withdraw them with the aim of avoiding being subject to future restrictions. "The vast majority of new developments are oriented towards sale, with those intended for rent being practically non-existent," he said, as quoted by the news outlet Altaveu.

Against this background, throughout 2025, rental inflation in Andorra (measured by the annual change in actual rentals for the housing component of the consumer price index) re-accelerated rapidly from 2.7% in March to 5.8% most recently reported by the DS in November, and continued to trend notably above the all-items inflation, which was registered at 2.8% in November 2025.

Data Source: Department of Statistics.

In nominal terms, according to the Q3 2025 report from the property platform Pisos.ad, the average apartment rent in Andorra reached EUR 3,168 (USD 3,701) per unit, with the average rent per sqm standing at EUR 27.76 (USD 32.43). At the same time, the average house rent was recorded at EUR 4,359 (USD 5,092) per unit, with the average rent per sqm standing at EUR 16.81 (USD 19.64).

Research conducted by Global Property Guide previously found gross rental yields in Andorra at the average level of 5.80% in July 2025.

Average asking rents by parish:

Moving forward, Xavier Espot, Andorra's Head of Government, announced in an interview that the authorities plan to initiate a partial liberalization of forced extensions of rental contracts starting from 2026. While the current regime of extensions (effectively freezing many leases and limiting rent changes) remains in effect until 2027, the government will try to ease into liberalization gradually to avoid an "unsustainable social situation" it could create.

The proposed scheme will establish a limitation on the increase in rental prices to lift some of the forced extensions currently in place. "We want a progressive de-intervention in the rental market, but with limits to rental prices," Espot remarked, as quoted by Diari d'Andorra.

Mortgage Market:

Strong Growth in Lending Activity, New Support Program for First-Time Buyers

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.

After eight consecutive cuts, the ECB has maintained its stance in the second half of 2025, making no moves at the October meeting of the Governing Council and keeping the deposit facility rate at 2.00%, the main refinancing operations rate at 2.15%, and the marginal lending facility rate at 2.40%. Following the general trajectory of policy rates, the 12-month Euribor gradually eased from the 4% peak observed in the second half of 2023 and stood at 2.22% in November 2025.

Data Sources: ECB, Department of Statistics.

Along with the global 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, 3.48% in 2023, and 3.79% in 2024. While the indicator is published by the authorities annually and no official figures for 2025 are available yet, the advertised offers by the local banks at the time of research demonstrate that, similarly to other European markets, the cost of borrowing in Andorra has decreased somewhat from its peak levels over the course of the year.

Minimum advertised interest rates on mortgages by selected banks in Andorra as of January 2026:

Lower interest rates combined with tension in the rental market revived lending activity in Andorra, with local experts interviewed by Radio and Television of Andorra (RTVA) noting that the rebound in demand is largely driven by younger borrowers looking to finance their first home, as rental costs in many cases became comparable to mortgage costs.

Following a contraction in 2023, both the volume (+16.9% year-on-year) and value (+21.8% year-on-year) of new residential mortgages granted notably picked up in 2024, and the trend has only strengthened in 2025, according to the figures published by the DS. A total of 426 new residential mortgages were reported between January and June 2025, amounting to EUR 173.9 million (USD 200.3 million), representing a 38.3% increase in volume and 82.0% increase in value compared to the same period in 2024.

On the community level, the parishes of Escaldes-Engordany, Encamp, and La Massana were notably ahead of other areas in terms of lending activity, together representing over 50% of the total volume and over 60% of the total value of new mortgages granted during the period.

By type of claimant, the vast majority of all mortgages (including residential and other categories) during H1 2025 were issued to Andorran nationals (91.9%), with the remaining 8.1% granted 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 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 in 2024.

As one of the measures to address the issue, in October 2025, the Government of Andorra, together with banking sector institutions, launched a support program for first-time buyers. The program combines a public guarantee on the loan with government subsidization of interest during the first 7 years, when eligible residents will pay only 12-month Euribor (with no bank spread). From the eighth year onwards, the interest rate will be calculated as 12-month Euribor + a discounted margin of 0.50%. The maximum property price is capped at EUR 600,000.

"This is an unprecedented joint effort: the Government provides security and a subsidy, and the banks are doing their part by offering credit at the Euribor rate, with no margin, for seven years. It is the best opportunity to turn rent payments into your own property," Conxita Marsol, Andorra's Minister of Presidency, Economy, Labor, and Housing, said about the initiative.

Socio-Economic Context:

Growth Resilient, Set to Moderate Going Forward

Following a remarkable post-pandemic recovery, the Andorran economy continues to demonstrate resilient growth above its long-term potential, although the pace of expansion is set to moderate. Driven by the service, banking, and construction sectors, the country's real GDP growth in 2024 reached 3.4%, with the IMF projections currently at 2.4% for 2025 and 1.6% for 2026. The latest edition of the macroeconomic forecast from the DS expects 2.8% and 1.7% growth for the respective periods.

Consumer price index (CPI) inflation in the country receded gradually from 6.2% in 2022 to 5.6% in 2023 and 3.1% in 2024. The most recent reporting from the DS showed the indicator at 2.8% in November 2025, and the average annual level is projected to reach 2.4% in 2025 and 1.6% in 2026. The IMF forecast expects the indicator to fall to 2.2% in 2025 and 1.8% in 2026.

Data Source: IMF.

Along with the active banking sector, tourism remains a key driver of Andorra's economy, especially during the winter season. In the ten months of 2025, the number of tourists reported by the DS reached 3.7 million people, representing a 5.9% increase compared to the same period in 2024. The largest share of international tourists, traditionally, consisted of Spanish (62.9%) and French (18.4%) nationals. The total number of overnight stays during this period exceeded 10.5 million, representing 4.6% year-on-year growth.

Based on the DS figures, tourists primarily stayed in hotels (56.0% of overnight stays), with friends or family (15.1%), and in dedicated tourist housing (8.7%). Among the Andorran parishes, they

preferred accommodation in Andorra la Vella (27.1%) and Escaldes-Engordany (21.8%).

In addition to overnight tourists, the country welcomed 4.0 million same-day visitors (-11.3% year-on-year) between January and October 2025.

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 stood at 87,097 inhabitants, of which only 45.3% were 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. As of September 2025, 75.2% of employees working in the Principality were of foreign origin, the top countries of origin being Spain (32.8%), Portugal (13.3%), and Argentina (8.2%). Overall, the labor market in Andorra remains tight, with the quarterly unemployment rate most recently reported by the DS at 1.4% in Q3 2025.

Data Source: Department of Statistics.

Based on Andorra's strong structural fundamentals and resilient growth, in April 2025, Fitch Ratings affirmed Andorra's 'A-' standing with a stable outlook.

While the economy remains resilient, it is gradually converging to its lower long-term growth potential, however. The 2025 Article IV staff report from the IMF outlined challenges concentrated over the country's medium term prospects: stagnating GDP per capita, bottlenecks in the housing and labor markets, an aging population, and climate change.

"As climate change challenges an economic model dependent on winter tourism and significant population aging builds up contingent liabilities, ambitious structural reforms are needed. A recently negotiated EU Association Agreement (EUAA), if approved by referendum, could provide the needed momentum for reforms," said the report.

Previously, Andorra's government and the European Commission concluded negotiations on the Association Agreement between the Principality and the EU that had been conducted since 2015. If ratified, it would allow Andorra to participate in the EU's internal market and enhance cooperation in various policy areas. As of the end of 2025, however, the legal status of how the agreement will be concluded is still reportedly under discussion in the EU Council, with no clear timetable for the next steps announced.

Sources:

1. Government of Andorra
   1. The Government Launches a Program to Acquire or Lease Unused Buildings… (CA): https://www.govern.ad/
2. 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 2025: https://www.estadistica.ad/
   4. Mortgage Statistics, First Semester 2025: https://www.estadistica.ad/
   5. Consumer Price Index of Andorra, November 2025: https://www.estadistica.ad/
   6. Family Budget Survey, Year 2024: https://www.estadistica.ad/
   7. Labor Force Survey, Third Quarter 2025: https://www.estadistica.ad/
   8. Border Tourist Movement Survey, November 2025: https://www.estadistica.ad/
   9. Population Estimates, November 2025: https://www.estadistica.ad/
   10. Statistics of Salaries, September 2025: https://www.estadistica.ad/
   11. Macroeconomic Forecast 2025-2030, December 2025 (CA): https://sig.govern.ad/
3. Legal portal of the Principality of Andorra
   1. Law 5/2025, of March 6, for Sustainable Growth and the Right to Housing (CA): https://portaljuridicandorra.ad/
4. International Monetary Fund (IMF)
   1. Country Overview: Principality of Andorra: https://www.imf.org/
   2. 2025 Article IV Staff Report: https://www.imf.org/
   3. Principality of Andorra: Selected Issues, 2024: https://www.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. Monetary Policy Decisions, 30 October 2025: https://www.ecb.europa.eu/
   3. Euribor 1-year, Monthly: https://data.ecb.europa.eu/
   4. 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. 2024 Economic Report: https://www.ccis.ad/
9. Andorran Bank Association (Andorran Banking)
   1. The Government of Andorra and the Andorran banking sector are launching an innovative programme…: https://www.andorranbanking.ad/
10. MoraBank
    1. Mortgages: https://www.morabanc.ad/
11. Credit Andorra
    1. Mortgages: https://creand.ad/
12. Pisos.ad
    1. Andorran Residential Market, Quarterly Report (CA): https://www.pisos.ad/
13. Augé Holding Group
    1. Andorra and Housing Prices: The Cost of a Success That Turns Against Us: https://www.augelegalfiscal.com/
    2. New Omnibus Law in Andorra: Key Changes in Foreign Investment and Housing: https://www.augelegalfiscal.com/
14. Radio and Television of Andorra (RTVA)
    1. AGIA Believes That the Omnibus Law Could Cause a Crisis… (CA): https://www.rtva.ad/
    2. Mortgages Skyrocket in 2025 (CA): https://www.rtva.ad/
15. Diari d'Andorra
    1. Incentives for Building Rental Properties (CA): https://www.diariandorra.ad/
    2. Tourism Boosts the Economy With Record Figures in the First Half of 2025 (CA): https://www.diariandorra.ad/
    3. Rental Ads Invisible Due to Long Lists of Applicants (CA): https://www.diariandorra.ad/
    4. Partial Liberalization of Forced Rental Extensions in 2026 (CA): https://www.diariandorra.ad/
16. Ràdio SER Principat d'Andorra
    1. The AGIA Expert Recognizes That the Increase of Residential Prices… (CA): https://cadenaser.com/
    2. Property Owners Consider That the Omnibus Law Will Undermine the Economy (CA): https://cadenaser.com/
17. La Veu Lliure
    1. An Expert Claims That Housing Prices May Surprise Again… (CA): https://www.laveulliure.ad/
    2. The European Commission Proposes That the Andorra Agreement Should Not be a Mixed One: (ES) https://www.laveulliure.ad/
18. Andorra Live
    1. New Regulation on Foreign Investment in Andorra: Balancing Growth and Access to Housing: https://andorralive.com/
19. El Periodic
    1. The Government Will Promote Incentives for the Construction of Rental Housing (CA): https://elperiodic.ad/
20. Altaveu
    1. AGIA Warns That the Rental Market "Is Practically Broken" (CA): https://www.altaveu.com/