A large number of Spain’s 700,000 unsold new homes will never sell at their current price and should be reduced by 50%, according to a report by the Spanish bank Bankinter.

It describes 30% of the homes as being un-saleable with around 50% having been built for holiday-home buyers from Northern Europe. However the majority of these 200,000 homes are owned by the banks, after loans to developers turned sour and the report says the banks would be reluctant to sell at such low prices.

The market is unlikely to recover until at least 2014 according to Bankinter while prices are expected to fall by 6% over the next two years. It expects only 200,000 homes to be sold in 2011, which is the lowest number in eight years and represents a fall of 55% compared to 2007 when 412,000 homes were sold.

The report states that 50% price falls are long over-due, and that banks are guilty of keeping property prices artificially high.