The Spanish government has devised a new plan to reduce the number of unsold homes by offering permanent residency to any foreigners who buy a house or apartment worth more than €160,000.

The plan is expected to be approved in the coming weeks and will be aimed mainly at Chinese and Russian buyers.

Spain has more than 700,000 unsold houses following the collapse of its real estate market in 2008.

Demand from the recession-hit domestic market is stagnant.

Prime Minister Mariano Rajoy stressed that the plan has not yet been finalised.

He added that Spain "needs to sell these homes" and that getting them off the market could help revive the nation's devastated construction industry.

The plan to unload the unsold homes comes as thousands of houses have been repossessed by banks and their owners evicted because they cannot pay their mortgages.

The government last week approved a decree under which evictions would be suspended for two years in specific cases of extreme need.

The country's residency offer would beat others in bailed-out countries such as Ireland and Portugal, where residency papers are offered to foreigners buying houses worth more than €400,000 and €500,000, respectively.