Selected Issues Papers

Housing affordability is an increasing social and economic concern for Andorra. Changing demographics and increasing real estate prices and rents combine to create a housing affordability issue in Andorra. This paper shows a granular analysis of housing affordability, exploiting microdata from the Survey of Living Conditions, to identify the groups that are most affected and better inform and target housing policies. Evidence that affordability is lower for renters and that Andorra is a renter-dominated real estate market combines to create a housing affordability issue. Low-income and low-skilled workers are disproportionally affected. This study analyzes the evolution and characteristics of housing demand and supply dynamics in the country, which indicates a supply and demand mismatch in the affordable segment of the Andorran housing market as well as insufficient fluidity which exacerbates the shortage of short-term rentals and complicates the hiring of foreign workers. A multipronged policy approach is needed, and a careful balance is needed to minimize market distortions while increasing the stock of housing in the medium-term.