FRANKFURT (dpa-AFX) - The freeze on new construction announced by Germany's largest real estate group Vonovia has a "fatal signal effect" for the housing industry, according to the IG BAU trade union. "This is a low blow for the market, which urgently needs housing, and for the people who are urgently looking for housing," said Harald Schaum, deputy national chairman of the Industriegewerkschaft Bauen-Agrar-Umwelt, in Frankfurt on Wednesday, according to a statement.

Federation and countries would have to help now those, "which are socially in the housing industry on the way", above all the local, cooperative and church housing companies. The state must now "turn the rudder around" and put the funding, especially for social housing construction, on completely new feet. "Otherwise, the construction of new social housing will completely plummet this year."

Vonovia's Chief Development Officer Daniel Riedl had told the "Westdeutsche Allgemeine Zeitung" that Vonovia would not launch any new construction projects this year. The reason he gave was the rise in interest rates and inflation. It would therefore be necessary to wait until capital was available again at acceptable interest rates or until a corresponding subsidy made construction possible. According to Riedl, construction starts have been "pushed back". When conditions on the capital market improve, the projects are to be implemented. According to a Vonovia spokeswoman, around 2,000 apartments are affected by the new construction freeze./tob/DP/jha