📋 Tender Overview
Minister Conxita Marsol presented the conclusions in a public appearance at the General Council and announced the Governments desire to encourage the purchase of a first home in Andorra, where nearly 64% of the population lives in rental housing.
The Minister of the Presidency, Economy, Labor and Housing, Conxita Marsol, presented in a public appearance before the Legislative Committee on the Economy the update of the study on the cost of living, as determined in the General Council last February within the framework of the Law on urgent measures to improve the purchasing power of citizens. One of the first conclusions of the study on the cost of living is that in the last two years the purchasing power of the majority of the countrys citizens has grown. If we take into account those people with lower incomes, it is evident that incomes have increased by 25% while inflation has grown by over 10%. Thus, purchasing power has increased by an average of 13% in this income bracket. Marsol explained that most people in the country earn more than what they earned in 2021 and than what inflation has increased: they have gained purchasing power, and added as a positive aspect that compared to neighboring countries, our situation in terms of income and capabilities is superior.
Measures have contributed to the improvement in purchasing power, she explained, such as the implementation of free public transport and the increase in the interprofessional minimum wage above inflation. This has allowed, in five years, to increase it by 27%. The Government has the will, the minister recalled, to increase the minimum wage year after year above the consumer price index (CPI) to increase purchasing power and gradually bring it closer to 60% of the average wage. This marks a trend in the general increase in wages, which have risen on average above inflation. During the appearance, Marsol also referred to the latest data from the Andorran Employment Service, corresponding to November 2024, which reveal that the number of people looking for work is 276. This is the lowest figure in the last fifteen years, since it is necessary to go back to 2009 to find a lower figure (265 applicants).
The update of the cost of living study places the percentage of the population with a situation of severe material deprivation at 7.3%. Minister Marsol explained that the figure remains stable and that the Ministry of Social Affairs meets the needs of this segment of the population. The poverty risk rate is 13.6%, lower than in neighboring countries.
Housing in Andorra
The study shows that almost 64% of the population lives in rented accommodation. On the other hand, the increase in purchasing power in the last two years -thanks in large part to the rent freeze that affects most contracts, explained Minister Marsol-, the overload rate of rented homes in Andorra is much lower than in neighboring countries.
Conxita Marsol has announced that the Government is working to develop policies to encourage the purchase of the first home, through programs partially covered by income obtained from foreign real estate investment, where more than expected has been collected. These programs to promote first-time home purchases will complement the affordable public rental stock and the measures contemplated by the future law on sustainable growth and the right to housing so that rental prices are adjusted once new apartments have been incorporated into the real estate market.
Study methodology
This study responds to the agreement of the General Council in the session of February 1, 2024, regarding the update of the study of the cost of living in the Principality of Andorra, prepared in 2018, with the aim of determining the adequate income for a household of one adult, from which, using the OECD equivalence scales, the adequate income can be calculated for any type of household, taking into account its composition. To achieve this objective, the Statistics Department has used different sources of information to have a detailed view of the living conditions and the structure of the expenditure of households in the Principality of Andorra, with special attention to housing expenses.
Firstly, using the Living Conditions Survey, where the adequate income is approximated based on the threshold that defines the poverty risk rate. Data from the Household Budget Survey (HBS) have also been used, which analyses household expenditure to approximate the adequate household income of an adult based on the expenses necessary for a decent standard of living. The third approximation has been achieved by calculating the cost of a food basket proposed by the United Nations Food and Agriculture Organization.culture and Food (FAO), based on the prices collected by the CPI. Finally, the housing situation in the Principality of Andorra has been analyzed and the disposable living income per person has been estimated, fundamental elements for understanding the quality of life and the socioeconomic conditions of the population. In conclusion, the four methodological approaches adopted in the study on the real cost of living in the Principality of Andorra consistently point to an adequate annual income that is between EUR16,100 and EUR18,700 for a household of one adult, including the cost of renting the home.
