Residential property in Spain is still 27% over-valued, despite the property market crash, claims a new report from Aguirre Newman, a real estate consultancy.

A big part of the problem is Spain’s glut of unsold homes, argues the report. Aguirre Newman estimate there are 1.5 million homes on the market today, including resale properties and homes that have been newly built or are close to completion.

Demand stands at around 300,000 homes every year, say Aguirre Newman, meaning there is 5 years’ worth of housing stock on the market.

The report concludes that Spanish property prices will continue falling in 2010.