Prices on bungalows increased by 6 per cent from December till January, while duplex housing rose by 4.4 per cent.

Prices on apartments rose by 3.7 per cent in the same period.

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From 2013, the cancellation period for investors will be 12 months and new investors will be subjected to a holding period of a minimum of two years, the sources said.

Up to now, there had been no regulation on holding and cancellation periods. Individual funds had set their own rules.

The financial experts also agreed that under the new regulation, investors would only be allowed to withdraw 30,000 euros (25,498 pounds) from the fund every six months. Foreign capital in a fund would not be allowed to exceed the 30 percent threshold, the sources added.

Open-ended property funds, from which investors are supposed to be able to withdraw money at any time, have proved popular among German savers, but a number of funds barred investor exits at the peak of Germany’s banking sector crisis in autumn 2008 to avoid being forced into asset fire sales to meet the cash calls.

Earlier in January, German real estate fund Degi Europa, which is being liquidated by its owner, British group Aberdeen Asset Management (ADN.L), paid investors a first installment of around 20 percent of the fund’s total value.

Nine real estate funds in Germany are still frozen. Three, including those run by Aberdeen Immobilien, KanAm Group and Morgan Stanley (MS.N), have announced their liquidation.

In November, AXA Real Estate, part of French insurer AXA (AXAF.PA), said it would keep its 2.7 billion euro German property fund frozen for another year, in view of the ongoing liquidity crisis.

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Before the recession, 30,000 households were in a similar position, the SCP says in a report out on Wednesday. But unemployment and lack of savings have forced up the number of households in a potentially difficult situation.

The SCP say housing costs can be considered too high if more than 35% of income is spent on mortgage, local taxes, water and energy.

Starters on the housing ladder are most vulnerable, but immigrants and the self-employed are also increasingly effected, the SCP says.

Tax relief

If the economic crisis continues, some 65,000 home owners, or 2% of the total, will be in trouble, the organisation says.

The SCP estimates scrapping tax relief on mortgage interest payments will lead to a 10% drop in house prices, forcing more households into the danger zone.

Most parties have included a commitment to mortgage tax relief reform in their election manifestos.

Home owners

The home owners lobby group VEH said on Wednesday it did not regard reducing mortgage tax relief as a taboo subject.

‘If homes remain affordable and the value of property does not suffer, then [maintaining] mortgage tax relief is not an end in itself,’ VEH director Rob Mulder told website nu.nl.

The housing market in its entirety should be looked at instead, Mulder said. ‘We are very opposed to scrapping mortgage tax relief as a simple cost cutting exercise.’

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Tenant-owner apartments (bostadsrätter) in central Stockholm fell by two percent in April, a new report from Mäklarstatistik shows, with price falls of one percent across the greater Stockholm area.

“Price developments in Stockholm’s inner city set the trend for the housing market across Sweden. The decline may take the price curve down a notch. We shall have to see how the prices develop in May,” said Claudia Wörmann at the Association of Swedish Real Estate Agents (Mäklarsamfundet) to news agency TT.

Prices in central Gothenburg and Malmö however climbed by two and three percent respectively.

According to the SEB bank’s latest property price indicator for May, 54 percent of Swedes expect prices to climb, up from 50 percent in April. The number who expect falling prices declined from 15 percent in April to 13 percent in May, although the survey was conducted prior to the Greek debt crisis.

“Households are more optimistic about the economic cycle and the labour market, and the housing market feels stable. It is too early to read in the effects of the Greek debt crisis on the Swedish housing market,” Wörmann said.

“There are a lot of people attending apartment showings and it feels as if the market has got going again,” she said.

Most market analysts expect the Riksbank to begin hiking interest rates again in the summer.

“It is difficult to submit a forecast for price developments in the autumn. But I think that most households are very conscious that there will be higher interest rates. It is difficult for anyone to project how the financial debt crisis affecting several countries in southern Europe will develop and impact on the economic cycle,” said Claudia Wörmann.

Over the past quarter prices for houses and tenant-owner apartments across Sweden have climbed by three percent. Over the past year prices have increased by eight and 11 percent respectively.

Mäklarstatistik is a cooperation between the Association of Swedish Real Estate Agents, and estate agents Fastighetsbyrån and Svensk Fastighetsförmedling. The statistics are based on sales contracts covering around 70 percent of the Swedish estate agent controlled market.

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O’Neill Properties Group LP argued that Citizens Bank, using an “artifice” of fabricated or sham defaults, tried to collect on about $180 million of loans because of RBS’s own liquidity crisis resulting from soured investments.

The bank “embarked on a campaign to raise and recover capital by any means necessary — whether lawful or not,” O’Neill said in a lawsuit dated January 19 and filed with the Philadelphia Court of Common Pleas.

O’Neill is seeking $4 billion to reflect damages it said it had suffered or expected to suffer as a result of Citizens’ actions, plus $4 billion of punitive damages.

Citizens Bank spokeswoman Sylvia Bronner said the bank does not comment on pending litigation.

The U.K. government took a majority stake in RBS in 2008 in return for billions of pounds of emergency funding.

O’Neill Properties develops commercial and residential property on brownfield sites in the Philadelphia area.

Headed by founder Brian O’Neill, the privately held company said it had completed $1 billion of projects and had about $4 billion of projects in the pipeline.

According to the 35-page lawsuit, Citizens Bank’s parent directed the Pennsylvania lender to “defraud, mislead and renege” on financing commitments to recover outstanding loans, even though those loans were not yet due.

O’Neill said Citizens’ actions had jeopardized its Worthington Project development, a 1.6 million-square-foot (148,600 square-metre) mixed-use complex on the site of old steel works in Malvern, Pennsylvania.

It also alleged that Citizens’ actions had made it harder to obtain financing from other lenders.

“When an original lead lender for a construction project such as the Worthington Project no longer exhibits confidence in a project by prematurely seeking to exit as a lender before completion of the vertical construction, a snowball effect occurs and other financial institutions refuse to lend on that project,” the lawsuit said.

In November, Citizens secured a $61 million court judgement against O’Neill Properties over loans on the Worthington Project. The company denied it was in default.

The case is O’Neill et al v. Citizens Bank of Pennsylvania et al, Court of Common Pleas, Philadelphia County.

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Scrapping this form of mortgage (which allows home owners to the maximum tax relief on their loans) could be a ‘realistic first step’ in making the cuts that the cabinet needs to get the country’s finances back on track, according to Labour and the orthodox Christian party ChristenUnie.

Getting rid of mortgage tax relief is a politically sensitive issue but is one of the 20 areas being looked at for possible cuts. Morgage relief costs the treasury around €12bn a year, says the Volkskrant.

The Christian Democrats made an election pledge that the tax break for home-owners would not be cut, although they are now less vocal in their opposition.

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The figures for October, which will be released Tuesday, should reflect the rush of homebuyers trying to complete their purchases before the original expiration of a federal tax credit. The Nov. 30 deadline was extended last month to April 30.

“The (tax) credit likely held the floor on prices for a time,” said Zach Pandl, an economist at Nomura Global Economics.

Economists predict the Standard & Poor’s/Case-Shiller home price index of 20 major cities fell 7.2 percent compared to October last year, according to Thomson Reuters.

The annual declines have been shrinking since the spring, so if the October reading falls far short of expectations it could “reopen the debate on whether prices have reached bottom or not,” Pandl said.

The Thomson Reuters survey does not include an estimate for the change from September, but IHS Global Insight expects the index will show a slight increase, marking the fifth straight monthly gain.

“Sales numbers were strong in October, so we’ll probably see higher prices” from September, said Patrick Newport, an economist with IHS Global Insight.

In addition to a credit of up to $8,000 for first-time buyers, Congress expanded the program to include homeowners who have lived in their current properties for at least five years. They can now claim a tax credit of up to $6,500 if they relocate.

About 2 million homebuyers have already tapped the original tax credit, the National Association of Realtorsestimated, and another 2.4 million are forecast to take advantage of the new credits.

But the immediacy that fueled the recent sales flurry has dissipated and buyers are biding their time, as recent home sales data showed. New home sales plummeted unexpectedly by 11 percent in November from October, the Commerce Department reported last week.

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