Asking prices for properties in Spain were slashed by 10.6% on average in the 12 months to July, according Idealista.com.

The year-on-year drop is the biggest fall in prices since the housing crisis began, as private vendors lower their expectations as rumours intensify that the country is in need of a major financial bailout from the EU.

The news surfaced at the same time as a new report from the Royal Institution of Chartered Surveyors predicted that distressed Spanish property will outweigh demand in the third quarter of 2012.

The latest RICS report shows that the net balance of distressed supply ranks 50 on the firm’s index; far above demand, which scored 40.

Despite this, RICS also found that Spain is in a better economic position than other recession-hit property markets in Europe, such as Ireland and Greece.

However, construction in Spain has dropped by almost one-third, according to new figures, with just 48,876 homes completed across the country in the first five months of 2012, the Ministry of Development revealed, 32.6% lower than the same period in 2011, which was down 34.7% compared to 2010.