The average price of new homes in Spain fell by 4 percent during 2011 and would continue to do so in 2012, a study showed on Tuesday.

According to the study published by the Sociedad de Tasacion, construction work began on just 81,000 new homes in 2011, the lowest number since 1985, although the price of a new house is now seven times that of 27 years ago.

The study found that in December 2011, the average price of an average-sized new home (90 square meters) in a Spanish provincial capital was 213,840 euros (279,275 U.S. dollars).

The main reason that the housing market has continued and will continue to shrink is potential home owners' difficulty in financing purchases, given the reluctance of Spanish banks to grant mortgages in the current financial climate.

With the indicators pointing to Spain possibly dipping back into recession for 2012 and with that recession coupled with a possible rise in the level of inflation, the Sociedad considered that it would be difficult for the housing market to recuperate in a climate of uncertainty over job security and a lack of credit.

The new government of Mariano Rajoy has already announced that it will maintain sales tax on new homes at a low level of 4 percent in an attempt to stimulate the market. But that same measure proved relatively ineffective during the last months of Jose Luis Zapatero's mandate as Prime Minister.

Looking at Spain as a whole, the highest prices for housing were in Barcelona, where new homes cost 3,671 euros a square meter. The cheapest housing was in Murcia with the price at 1,369 per square meter. (1 euro=1.3 U.S. dollars)