The Ministry of Construction said that difficulties in the domestic economy will have a negative impact on the production and business of construction enterprises and property traders.

Many construction and property trading companies have already gone bankrupt because people simply aren't buying houses, so the real estate market has little chance of recovery before the end of this year, said economist Bui Kien Thanh.

The Government had plans to pump capital into some property projects and housing for low-income earners, Thanh said, but that is unlikely to affect the market as a whole.

The market will only really recover when people had money again to buy houses, he said.

To solve this stagnancy, property companies need to switch from luxury high-end apartments, and concentrate on affordable housing, Thanh said.

If the companies could start selling properties, then banks may consider providing loans for future projects, he said.

Savills Vietnam, a property consulting firm, said according to its survey on Hanoi 's real estate market in the second quarter released on July 10, one in five people asked said they are still interested in purchasing a property.

Most investors said they have no plans to lend capital for property development, according to the survey.

Savills Vietnam expected property prices to continue to fall, especially villas and houses.

The Ministry of Construction reported that in the first half of the year, the real estate market has fallen.

Banks has reduced interest rates and increased credit for the real estate sector and those involved in the sector has taken note, the ministry said.

But this has failed to stimulate the market, and most buyers are waiting for prices to fall even further, it said.

The situation has had a knock on effect on building material producers and construction firms.